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Monthly debits -fixed or variable? How can fixed be cheaper?

posted by starrycc | 12 months ago

How can paying a fixed rate per month be cheaper over a year than paying for energy usage according to meter readings each month?

We still pay the same for standing charge and energy cost per unit so how can it make any difference what payment method we use?

I would rather pay for what I've used every month so it's always up to date, even though it's a lot more in the winter!

3 comments

posted by Ernie_C | 12 months ago
Re: Monthly debits -fixed or variable? How can fixed be cheaper?

For some people, it is easier to budget for a fixed monthly charge than a variable monthly charge.

posted by Jonnel | 12 months ago
Re: Monthly debits -fixed or variable? How can fixed be cheaper?

I'm reliably informed large businesses tend to pay fixed annual charges too - they pay the agreed price however much they use., in the same way lots of us do for water. The downside of this is they have to re-negotiate each year.

posted by Hooloovoo | 11 months ago
Re: Monthly debits -fixed or variable? How can fixed be cheaper?
It costs the supplier a little less to take a monthly direct debit than it does to manually process 4 quarterly payments. This is reflected in the tariffs requiring monthly direct debit having slightly lower standing charge and/or unit cost.