Tracker tariff

What it is

A tracker tariff usually links your price to a published reference, such as a wholesale index, plus a margin for the supplier's costs and profit. When the reference moves, your rate moves too, often day by day or month by month depending on the terms.

Structures vary between suppliers, so read the product terms rather than assuming.

Where you will see it

In the Principal Terms and the product description: look for the index name, the margin, how often the price resets and any cap or floor. Many trackers also list non-commodity charges separately, so see whether the contract is pass-through.

Why it matters

Trackers can be cheaper when markets fall, and they avoid locking in at a high point. But your bill can rise sharply, making budgeting hard. They suit people who can absorb swings or manage use around prices, and they are rarely the easy option for a small shop on a tight margin. Compare with a fixed rate before you commit.

Example

Illustrative only. A tracker is index plus 3p margin. A business uses 2,000 kWh a month.

• Index at 20p: rate 23p, bill 2,000 × £0.23 = £460
• Index at 28p: rate 31p, bill 2,000 × £0.31 = £620

That is a £160 swing in one month for identical use. A fixed rate of 27p would have cost 2,000 × £0.27 = £540 each month.

Ask what happens at the end of the term, and whether you can exit early.

Related terms

See flexible contract, fixed vs flexible and business energy price forecast.