Lower Price Standing Charge or Unit Rate?

Cordie

The Cheap Energy Club is offering me two tariffs with different providers for both gas and electricity that are very similarly priced. Is it better to go with one offering a lower priced standing charge or unit rate per kwh. There is no difference in customer service as both providers have good ratings.

I'm sure the answer is obvious but I'm finding the more I think about this the more confused I'm becoming.

molerat

Is your supplied annual kWh reading high or low. Bear in mind we have had a couple of warm(ish) winters so a cold one could see a large rise in gas use so if you have input a lowish figure the cheaper unit tariff would probably be the best choice.

Cardew

With high consumption, generally low kWh rate and high Daily Standing Charge(DSC) is the best solution.


With low consumption - the opposite.


However knowing your annual consumption in kWh* it is simple arithmetic to establish which is your best option - or use a comparison website.


*Most important you use annual kWh(units)

Cordie

Thanks molerat and Cardew, I have to be careful with my bills so my annual kwhs during 14/15 was gas 5872 kwhs and electricity 1460 kwhs. The difference between the yearly cost of the standing charge is £30 for both gas and electricity which seems rather large to me.

Cardew

Well you are a very low user; so enter those kWh figures into any comparison website and it will show the cheapest deals.


The combined DSC and kWh (unit) charge for those consumption figures will give the cheapest overall ost.

matelodave

The esay way to check is to put a couple of hypothetical amounts of kwh into a comparison website ie use your base figures of 5872kwh or gas adn 1460kwh of leccy and then increase them by 15-20% to see what the difference is.

Generally a low user like you would benefit from a lower standing charge and slightly higher unit charges whereas a high user might be better off with a lower unit cost. It's up to you to find the cut-over point and then see if there's a significant cost difference if your consumption goes up say during a harsh winter.

I'm a highish electricity user between 7000kwh and 8000kwh and the difference isn't usually all that big, although as you use both gas & leccy then you've got two standing charges which will have a bigger impact.

teddysmum

A person with very low usage would benefit from lower standing charge,but there is a break even point where above this usage,you are better off with a higher standing charge.


If offered two tariffs where one has lower standing charge and unit cost (as was the case for me , last year) the choice is obvious, but the break even annual kwh usage, above which a larger standing charge is best over the long term, is given by:


365XDifference in standing charges/Difference in unit charges.