This guide is all about the different kinds of electricity tariffs available. It will give you an overview of how they work, how they differ and how Homely can help you make savings.
Variable tariffs – unit cost changes over weeks and months
This is typically the tariff you would be on if you do nothing. The unit prices you’ll pay will change from time to time, mainly driven by the prices in the wholesale electricity market rising and falling, but irrespective of the time of day, the unit cost is the same. Typically your supplier will notify you if they are going to change the prices, usually giving several weeks’ notice. Variable tariffs don’t provide the reassurance of a fixed rate but they also don’t have any associated exit fees.
Fixed tariffs – unit costs locked in for a set period
These tariffs typically offer a fixed unit cost for one or two years. Again, you’ll pay the same unit cost irrespective of the time of day the energy is used. You’ll also pay an exit fee if you want to switch to another deal before the fixed period is up. Fixed tariffs often appeal to those looking for some certainty around their bills for the foreseeable future. However, if the wholesale market price drops your fixed rate might be more expensive than the variable one, and vice versa.
Smart tariffs – unit costs vary during each day
Smart tariffs (AKA Dynamic tariffs or Time of Use tariffs) work differently as you will not only pay a variable unit cost, it will vary up to 48 times each day. There will likely be an upper unit price cap and, in rare circumstances, you can actually be paid for using energy. The energy supplier will release a schedule of these different costs the day before. This creates an opportunity to make savings if you can operate your heat pump at the cheapest times and avoid the most expensive.
Tariffs and Homely
You can use Homely on any tariff. However, to optimise your savings potential we recommend selecting a Smart tariff, such as Octopus Go. That’s because Homely can then take everything it knows and has learnt, and combine that with the daily schedule of unit costs to come up with an optimised heating schedule. You’ll need to have Homely in Smart+ mode to take advantage of that. It’s a subscription service, free in the first year and £25 per annum after that.
Homely can also reduce your heating bills if you are on a Fixed tariff. It does so by factoring in what it has learnt about how your home heats up and cools down, and then layers the local weather forecast over that. This means that you get the cosy home you want without using more energy than required. You’ll need to have Homely in Smart mode for this. Smart mode is included with no charge.