The Energy Tariff Trap: Why Loyalty Costs You More Than You Think

How the loyalty penalty works

When your fixed-rate energy deal ends, most suppliers automatically roll you onto a Standard Variable Tariff (SVT). SVTs are almost always more expensive than the best available deals — sometimes by £300–£500 a year.

Suppliers rely on inertia. Switching is mildly inconvenient, so most people don't. The maths of that inertia is worth calculating.

The switching process

The UK energy market is regulated by Ofgem, and switching suppliers is straightforward:

1. Get a comparison quote (Ofgem's price cap applies, so the numbers are reliable)
2. Sign up with the new supplier — they handle everything with your existing supplier
3. You keep the same meters, pipes, and wires — only the billing company changes

There's no risk of supply interruption. It's purely an administrative change.

What to look for in a tariff

• Unit rate (pence per kWh) — the cost of the actual energy you use
• Standing charge (pence per day) — a fixed daily cost regardless of usage
• Contract length and exit fees — fixed terms give price certainty; flexibility has value too

The lowest unit rate isn't always the best deal. A low unit rate with a high standing charge can cost more for a typical household than a higher unit rate with no standing charge.

The real number

For the average UK household (using roughly 2,700 kWh electricity and 11,500 kWh gas per year), being on the wrong tariff can cost £200–£600 more than the best comparable deal.

That's not a frugality argument. That's £200–£600 that belongs to you, sitting in your supplier's margin.

For education and entertainment only. Tariff prices change frequently — always check current rates from a regulated comparison service.