Tracker Tariff Explained
What is a tracker tariff?
If you’re new to energy tracker tariffs, or simply looking for convenient, low-cost wholesale market prices our Flexi Online (Index Tracker) package could be right for you. This package aims to replicate, or track, wholesale electricity and gas prices. This is in contrast to our fixed packages which charge you the same amount during the year allowing you to plan each month but doesn’t allow you to take advantage of falling wholesale prices.
Important information – The wholesale electricity and gas price can fall as well as rise, so you could pay more or less for your energy each month. If you are at all unsure of the suitability of the Flexi online (Index Tracker) package for your circumstances, please contact us by email or call us on 03455 57 78 78.
Wholesale Price Index
We don’t expect you to look at the price every day, that’s our job, but we don’t expect you to just take our word for it either, and that’s why we use independent price data – taken from www.theice.com – a recognised body within the industry
How we calculate changes to your price
When launching our new tariffs we calculate the average price for the first full month ahead (i.e. for a tariff launched in January assesed the average price for the month of February). At the end of each month we will assess the average price of the next month ahead and compare with the average price for the previous month. We will then calculate the difference in pence per kWh and your energy price will change (up or down) by that value on the 15th of the following month. All other elements of your tariff are fixed for the duration of your contract. Below is a worked example:
- Launch prices – calculated on average forward prices for February
- 1st week of March – calculate new prices based on difference between launch prices (February month ahead) and on average March 2018 prices throughout the trading month of February 2018.
- 15 March – New prices come into effect.
- 1st week of April – review based on April prices throughout the trading month of March.
15 April – New prices come into effect
How will payments work?
We try and make things as simple as possible and, where we can, try to avoid adjusting your direct debit too much, so it makes things easier for you to manage. We will let you know in advance if your payments need to change.
We will periodically review your Direct Debit amount to ensure it is keeping track with your usage and the latest view of prices. Please remember that prices are likely to be higher in the winter, as will your likely consumption and therefore any credit up in the summer may be required to cover the winter period. Of course, where applicable reductions to direct debits can be made
What about volatility?
We understand volatility can be a concern however; we have thought about the impact of this on our customers and have come up with a way to minimise the risk of potential price spikes. However, given the volatility of wholesale prices, it may not always be possible to fully mitigate the impact of price spikes.
This means you are tracking the wholesale energy price but have some protection from short-term price volatility. However, because of the seasonal nature of prices it is likely your price will be higher in the winter and lower in the summer