Flat-rate electricity tariff
These are presented as the tariffs under which you will always pay the same monthly instalment, with no unpleasant surprises on your bill.
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Everything you need to know before signing up
1. What is a flat-rate electricity tariff?
A flat-rate electricity tariff is one that promises you a fixed monthly payment for one year, based on your electricity consumption during the previous year and regardless of any rises or falls in the price per kWh. And there are no unexpected surprises.
So I don’t need to keep an eye on the electricity bill?
Exactly. With flat-rate tariffs, you don’t have to worry about the three electricity bands or having to plan your washing, as you’ll always pay exactly the same amount at the end of the month.
At first glance, this sounds great because, given the current state of electricity prices, who wouldn’t sign a contract that promises peace of mind, knowing that the bill will always be the same?
That said, that ‘promise’ and ‘peace of mind’ are relative, and I’ll explain that to you later
2. How do flat-rate electricity tariffs work?
Let’s say you decide to sign up for a flat-rate plan. When you read the details, the first question that might spring to mind is:
Can I just relax and leave the air conditioning on for as long as I like? Here’s the crux of the matter: NO, you’re not free to use as much energy as you like.
As a customer, you can only use the number of kilowatts of electricity specified in your contract with your electricity supplier.
But wasn’t it a flat rate, regardless of consumption? Well, no. And that’s where the nasty surprises come in. Because, as we mentioned earlier, the fixed monthly charge you pay is calculated by the supplier based on your consumption from last year.
So, what happens if you buy a new appliance? What if the cold snap is even worse that winter and you need to use more electricity? What if your family grows?
Well, we have to tell you that this so-called flat-rate tariff doesn’t take that into account… as we’ve already explained, they base it on your previous annual consumption. If your living circumstances have now changed, you’ll be in for a nasty surprise at the end of the year, when the supplier bills you for all the extra kilowatts you’ve used and asks you to pay the amount due.
3. Features of a flat-rate electricity tariff
1. A flat-rate tariff is not the same as unlimited usage.
The fixed monthly charge you will pay is actually calculated by dividing your kilowatt consumption over the year prior to signing up for the Flat Rate tariff. And, as you’ve probably guessed, there is a monthly kilowatt limit. Which brings us to the following point.
2. Adjustment of the invoice at the end of the year
Let’s take a look at the small print of flat-rate tariffs. You can’t exceed the maximum kilowatt limit set each month, as the electricity supplier isn’t going to give you anything for free.
This calculation does not take into account changes in your consumption habits, nor cold or hot spells that might cause your consumption to vary from year to year.
So if you want to sign up for this type of tariff, you need to keep a close eye on the energy consumption of your household appliances. There are three possible scenarios here (although we should point out that the first is the most common):
- You exceed your contracted kWh allowance and, at the end of the year, your supplier asks you to pay the difference.
- That you have used fewer kWh than you were contracted for and that your supplier refunds you the difference.
- That each month you use exactly the number of kWh included in your tariff, so that you neither have to pay anything nor are you due a refund.
3. One-year contract
It depends on the electricity supplier. But generally speaking, when you sign up for a flat-rate tariff, you’re committing to a 12-month contract.
If, during that period, you wish to change your tariff or supplier, you will find that you have to pay a penalty “which will be a maximum of 5 per cent of the price stipulated in the contract for the estimated energy yet to be supplied”, as stated by the CNMC.
4. What is the difference between a flat-rate and a fixed-rate electricity tariff?
| Tarifa Plana | Tarifa Fija |
|
|---|---|---|
| ¿PAGAS LO MISMO TODOS LOS MESES?? | SÍ Pagas una cuota fija al mes independientemente de los kWh consumidos. | NO Pagas un precio fijo por kilowatio, así que tu factura de la luz depende del consumo de kilowatios que hagas |
| PRECIO FIJO DEL kWh | SÍ | SÍ |
| ¿TIENE LÍMITE MÁXIMO DE CONSUMO? | SÍ Si la superas, tendrás que pagar una penalización establecida por tu compañía. | NO |
| REGULARIZACIÓN A FINAL DE AÑO | SÍ Al final del año se hará el recálculo y si has consumido más kWh de lo pactado, te pasarán el recibo. | NO Pagas la energía que has consumido, por lo tanto, al final de año nadie te reclamará nada |
| PERMANENCIA | EN OCASIONES | NO |
| PARA QUIÉN | Para personas que tengan mucho control sobre su consumo energético. | Para personas que quieran estar seguras de que el precio del kWh siempre será el mismo ,pero que no quieran tener un control estricto sobre el consumo de kWh. |
5. Comparison of flat-rate tariffs
Endesa’s Flat-Rate Tariff
Endesa’s ‘Tarifa Única’ was launched as the market’s true flat-rate tariff, with no minimum contract period for its customers and additional services.
So can I eat whatever I like? NO. If your usage for the month exceeds the amount agreed in the contract by more than 30 per cent, Endesa will recalculate your bill for the following month.
And that’s not all: if you continue to exceed your kilowatt limit and Endesa considers your consumption to be excessive, they will contact you and switch you to the Tarifa Tempo 24H tariff.
And we’d like to point out that the prices per kilowatt-hour under this tariff are higher than the market average.
Iberdrola’s Flat-Rate Tariff
With this Iberdrola electricity tariff, you’ll have a personalised charge calculated based on your consumption patterns.
- Your personalised charge: Iberdrola calculates your flat-rate tariff based on your electricity consumption.
- Fixed price: this sets a flat rate, so you know you’ll be paying the same amount every month.
DOWNSIDE: if, at the end of the year, you have used more than the amount included in your instalment, you will have to pay the difference. Similarly, if you wish to cancel your contract before 12 months have elapsed, Iberdrola will carry out an annual adjustment to check whether or not you have exceeded your allowance. And if you have used more than your allocated kWh, you’ll have to pay the difference. Therefore, if you want this tariff, we recommend you get a pen and paper to keep a very close eye on your consumption, so that the end-of-year adjustment doesn’t come as a shock.
Naturgy Flat-Rate Tariff
This flat-rate tariff from Naturgy works in the same way as the previous two: your fixed charge is calculated based on your consumption from the previous year. If you exceed 30% of your contracted kilowatts, Naturgy will recalculate your fee, but if you exceed this limit, they will switch you to their Pay-As-You-Go tariff. Here at Quécomparo.es, we would like to inform you that Naturgy does not specify the price per kWh or the power charge on which they base your flat-rate tariff.
6. Is it worth signing up for a flat-rate plan at the moment?
To begin with, and to give you a clear idea of this, we’d like to point out that, according to the Organisation of Consumers and Users (OCU), signing up for a flat-rate electricity tariff is a serious mistake. In its statement, the OCU also noted that “these types of tariffs come at a high cost, amounting to 30 per cent more than the best fixed-price tariffs and up to 46 per cent more than the regulated tariff (PVPC)”.
Furthermore, it emphasises that these electricity tariffs are not truly flat-rate, as they always have consumption limits that are difficult for users to be aware of. So, is it cost-effective? If you have a high degree of control over your consumption, then yes.
If not, we recommend that you check what rate you’ll be charged for any excess kilowatts you use, as you could be in for a nasty surprise of up to €400 at the end of the year when your electricity supplier adjusts your bill.
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