In Spring 2014, Ofgem enacted several new tools to help consumers better understand the energy market. Tariff Comparison Rate (or TCR) was one of those tools.
This guide from uSwitch will help you understand what makes up the Tariff Comparison Rate, where you can find your plan’s TCR and how to use it to find the best energy deal for you.
TCR and the Retail Market Review
To better understand how TCR came about, it's best to start back in 2010, when Ofgem launched a full-on review of the energy market.
The regulatory body recognised that certain factors, including tiered-unit-rate tariffs, inconsistent standing charges policies, and the sheer number of energy plans available from each supplier were creating an unnecessarily complex market.
Hence, the Retail Market Review (RMR) was launched and, from this, several changes aiming to make the energy market fairer, simpler and clearer were enacted.
One of the changes requires energy suppliers and price comparison sites to provide a Tariff Comparison Rate for every plan.
Read more about Ofgem's Retail Market Review changes.
What is a Tariff Comparison Rate?
Many see the Tariff Comparison Rate as energy’s answer to the money market’s Annual Percentage Rate (APR). This is because it is designed to provide an easier way to get an indication of how your rate compares to other plans and suppliers.
In the energy market, this is done by giving an effective price-per-unit rate for every gas and electricity tariff — a rate which factors in elements a normal kWh rate wouldn’t, including standing charges and discounts.
It is worth noting that TCR will always be calculated based on medium energy use — a household that uses 3,100 kWhs of electricity and 12,500 kWhs of gas per year. Keep this in mind if your household falls in the low or high gas and electricity user range.
In general, you should consider TCR as only a guidance to what you are paying or will pay.
Also know that TCR is not yet available for time-of-use meter customers, such as those with Economy 7 and Economy 10 meters.
Where is my TCR shown?
A TCR can be found wherever a gas or electricity tariff is outlined. That means the plan you’re currently on has a TCR, and any plan you may be thinking of switching to will have one as well.
In fact, the point behind the TCR is to compare your current TCR to the TCR of other plans on the market to get an idea of how competitive your plan is. So, how do find these figures?
The TCR will be outlined on energy suppliers’ own websites and on price comparison sites.
You can find your current energy plan’s TCR on your energy bill and on your annual statement.
Ofgem’s changes will also see your bill feature what is referred to as a Tariff Information Label. This label will include your current plan’s TCR, along with other helpful info such as your plan’s actual kWh unit rates, plan end date and standing charge amount.
How to use a Tariff Comparison Rate
Ofgem is very clear that a TCR is not intended to be an exact calculation of what a consumer can expect to pay for an energy plan.
Rather, it is intended to provide an indication of how the costs of one plan compare to another, and ultimately motivate the customer to perform a full-market energy comparison using an Ofgem-accredited price comparison website such as uSwitch.
Accredited gas and electricity comparison sites will be able to provide a much more accurate calculation of your expected energy costs because you will be asked to provide information about your consumption and postcode — two factors that greatly impact your energy costs.
If you have never run an energy comparison, don’t worry it’s easy! Just pop your postcode into the the green box, or you can learn more by reading our step-by-step guide on How to switch your gas and electricity.
Retail Market Review (RMR) Everything you need to know about Ofgem’s RMR
Personal Projection How is it calculated and what’s it for