Energy Contracts Explained
Understanding Energy Tariffs
Energy contracts can be complex, but the basics are straightforward. Your monthly energy bill depends on:
- Your unit rate (price per kWh of electricity or gas)
- Your standing charge (daily fixed fee)
- Your actual usage
- Whether you're on a fixed or variable tariff
When Costs Become High
Energy costs are typically considered high when:
- You're on an out-of-contract tariff (often the most expensive)
- You haven't switched providers in several years
- Your monthly bill exceeds £120 for an average household
- You're on a standard variable tariff when fixed deals are available
What to Do
If your signal is Amber or Red:
- Check if you're out of contract (you can switch without penalty)
- Compare current market rates using comparison sites
- Consider fixed-rate tariffs for price certainty
- Review your actual usage - you may be able to reduce consumption