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Tariff comparison rate

Tariff Comparison Rate — updated June 2017

In spring of 2017, Ofgem announced it would roll back its requirement for suppliers and energy switching sites like uSwitch to provide a tariff comparison rate (TCR), effective 23 June of the same year.

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This guide provides previously published information about the purpose of the TCR, and the reasons behind Ofgem's decision to no longer require a TCR.

Why was the TCR introduced?

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.

What is a Tariff Comparison Rate?

Many compared the Tariff Comparison Rate to the financial 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.

energy tariff comparison rate

The TCR was calculated based on a medium energy use — a household that uses 3,100 kWhs of electricity and 12,000 kWhs of gas per year.

TCR was not provided for time-of-use meter customers (e.g. economy 7).

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Why did Ofgem remove the TCR requirement?

Citing an "evolving market", Ofgem recognised the need to remove what it called "prescriptive" rules. Instead providing a package of enforcable principles that placed a greater onus on the suppliers to deliver positive consumer outcomes.

These changes would bear in mind the importance of fostering competition and innovation within the energy market.

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