Tier 1 only applies for in UK apps right now. If you have an HSMP approval letter and you're within the uK, you can apply for EC through tier 1. It would be the same price (350) as it would be without Tier 1, and you'd submit your HSMP approval letter along with your Tier 1 app.
If you're outside the UK, you'd follow the old process until Tier 1 is implemented in your country.
For those that don't have the approval letter yet, then you pay the higher fee and do the whole process through Tier 1. You'd have to be in the UK now for this, and you'd have to be in a category that allows you to switch to Tier 1.
For those renewing (like me), you pay the higher fee and if you're in the UK, use Tier 1.
Hmm, sorry about that. I guess I answered more than your question.