Daily charge and unit rates?

daisycupcake

I know this may seem a silly question, but when i'm comparing energy and it comes up with how much u can save.... when I look at the actual rates there higher than what I have now.. so in theory yes, the monthly fixed amount is lower but the actual rates are higher meaning at the end of the fixed rate period I will have an outstanding balance of under paid usage? is that right?
If i'm using the same amount of units at a higher rate and the daily rate is higher, but the fixed monthly cost is lower, i'm going to get stung at the end of the term because obviously i'm not paying the right amount via direct debit so really it's not saving me anything in the long run.
The top 6 on my comparison search where all like this for duel energy.
I found with sainsburys that all their rates are lower, their daily rates and unit rates for both gas and electric are cheaper than what I have with E.ON.
Is this the main thing I should be looking at to really get my bills down?
Confused.com!!!

daisycupcake

Another thing is if the daily charge is higher by something like 16p (about £58 a year) and the unit rate is about 1-2p cheaper is this better than keeping the unit rate the same and saving the money by having a lower daily rate? wouldn't this way automatically be me money?

matelodave

As your energy costs are based on price per unit (kwh) and a daily charge then if they are lower than you are already paying you'll make a saving. Likewise if they are higher then it will cost you more.

The problem with energy comparison sites is that they will assume that you won't do anything at the end of your current contract and will therefore be transferred over you your supplier's standard variable rate. This can make it look as though you'll make massive savings.

In my case the comparison sites estimate I will save well over £400 whereas in reality I'll save less than £30 because I'll be taking out another fixed deal and my consumption profile doesn't match their estimates either.

I use the comparison site to steer me towards the best deals and then do my own sums based on my actual consumption and the quoted unit & daily rates to calculate what I'll actually pay. That allows me to work out what my monthly direct debit should be rather than some wild guess from either the comparison site or the energy company.

If you are a high user then a higher daily rate and lower unit cost might be more beneficial than for low users where it could be better to have a low daily charge and slightly higher unit cost. That's why you need a fairly accurate estimate for your own consumption and to do your own sums.

Robwiz

You'll find that suppliers take different approaches with their tariff structure. A higher daily standing charge can be ok if the price per unit is low. On the comparison sites you can have several runs, using different annual consumption figures to see which tariff comes out best.

When you look at the results, find your current supplier and see what saving is predicted for them. Any saving you would make will be the figure the site gives for the cheapest less what they suggest your existing supplier would save you (because you could/would switch to that tariff anyway).

Also, it's worth searching on electric only and gas only separately, because some of the cheaper suppliers don't offer a dual fuel tariff.

lvf

daisycupcake wrote: »

If i'm using the same amount of units at a higher rate and the daily rate is higher, but the fixed monthly cost is lower

This strikes me as odd. I think there might be a bit of confusion around your monthly DD payments.

With DD payments, energy suppliers have an obligation to try and get you to a zero balance at the end of roughly a year on the DD, known as your 'annual review'. Your payments may be a bit higher now if:

* Your use was higher than projected
* You have any outstanding balance
* You requested a credit refund
* Your annual review is coming up within the next 3-6 months (as winter bills are always projected to be higher)

At the end of the day, regardless of the DD amounts your account is still billed for the energy you use. If you move to a supplier with higher unit prices and daily standing charges, your bill amount is still going to be higher than what you are charged now.

This could explain the lower payments for higher prices.

Ectophile

daisycupcake wrote: »

Another thing is if the daily charge is higher by something like 16p (about £58 a year) and the unit rate is about 1-2p cheaper is this better than keeping the unit rate the same and saving the money by having a lower daily rate? wouldn't this way automatically be me money?

Not necessarily. The only way you will know for sure is to find some old bills going back a year, and work out how much gas or electricity you use in a year. Then get a calculator and do the sums.

If you are a light user then a low standing charge and a high price per unit is good for you. If you are a high user, then a higher standing charge and lower price per unit is better.

You pay the standing charge each day, regardless of how much electricity you have used. You pay the price per unit for every unit of electricity you use. The two are calculated separately, then added together to make your final bill. In particular, the standing charge is not a down-payment for the first few units every day - it's just a fixed daily charge that is added to the bill.