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What Are Tariff Comparison Rates (TCR)?

Last updated: 20. 05. 2020

What Are Tariff Comparison Rates (TCR)?
Have you ever felt that energy plans are elaborate and hard to understand? Well, in 2010 Ofgem realised the same thing and introduced the TCR. The tariff comparison rate or TCR was a tool introduced in 2010 to help people to compare the best energy deals easily without a headache.

Unfortunately, in 2017 Ofgem announced that customers could no longer expect suppliers and energy comparison sites to provide a TCR. Never fear, this handy guide will explain everything you need to know about the TCR, such as how to work it out, why Ofgem made the decision and if you can apply it to your household.

What Is the Tariff Comparison Rate (TCR)?

A tariff comparison rate is useful because it takes into account all of your costs such as discounts, rates and VAT. That number can then be quickly and easily compared to other plans to make sure you’re getting the best price. But be careful, it only really works if you have a ‘medium-use’ household.

If you use more energy or less energy than the average household, then this probably isn’t the best way to work out which energy deal is best for you. This is because of the way you work out a TCR. The TCR uses the typical average household’s consumption that Ofgem provides to come up with a final number. For electricity, this number 3,200kWh and 13,500kWh of gas. Suppliers worked out TCR with the following equations - they look scary but the numbers can easily be factored into place:

Electricity Tariff Comparison Rates
Standard tariffs: Standing charge x 365 days + unit rate x 3,200 kWh x 5% VAT / 3,200 kWh = TCR/kWh

Economy 7 tariffs: Standing charge x 365 days + unit rate x 3,200 kWh x 5% VAT / 3,200 kWh = TCR/kWh

Gas Tariff Comparison Rate
Standing charge x 365 days + unit rate x 13,500 kWh x 5% VAT / 13,500 kWh = TCR/kWh

Why Is the TCR No Longer Used?

The reason that Ofgem decided to do away with the TCR is that while it is a fair comparison, the rate is based on a national average and not a regional one. Ofgem decided that the TCR only takes into account the numbers, not other factors like customer service or complaints handling or any other services offered by a supplier which makes them better suited to you. Unit prices and standing charges also change from region to region, making a TCR inaccurate for most people.

While the tariff comparison rate offers an idea of costs, it is only ever a comparison tool and not a guaranteed price. The best way to compare energy deals and suppliers is to use a comparison tool that uses your own data not a national average. The TCR doesn’t take into account factors like your location, how much you spend monthly or when you would like to start your tariff. This means it is likely to be far more accurate to use your own numbers rather than using an estimation based on a household that might not match your own energy usage.

How Should You Compare Energy Suppliers Without the Use of the TCR?

The most important thing to consider when you switch energy suppliers is whether or not they’re right for you. Things like customer service and stability matter just as much as having the cheapest energy deal. You should make sure that the tariff is cost-effective for your own household, and you should find out how easy it is to switch to a new supplier. Make sure the supplier works for you, not the other way around!

Energy has different costs in different locations (yet another reason why the TCR may not be for you), so make sure you’re well informed about how much you should be expecting to pay.

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How Should I Switch Supplier?

As always, make sure you use a price comparison site such as usave to find all the best energy deals before you think about switching gas or electricity supplier.

Switching suppliers should be relatively painless. As a customer, you are protected by government regulations and your new supplier will make sure that everything related to your switch is their responsibility. When you switch, be mindful it can take up to a month and a half to complete the process. Your new supplier should keep you updated on the process either by email or through the post.

If moving house, ask your supplier if you can take your current tariff with you. Some suppliers will allow you to take your cheap energy deal with you when you move, but you need to check with them first and not just expect that you can. If you are moving to a new area and looking for a new supplier, check what’s available in your new postcode.

So, there you have it, a handy guide to the TCR and whether it’s the right comparison tool for you. It really isn’t as complicated as people think it is, so make sure you know exactly what you are paying and why.
Michael Quinn

Author: Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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