Fixed vs Variable Energy Tariffs: Which Is Right for You?
Choosing an energy tariff can feel like a gamble on future prices. In reality, the decision is less about predicting the market and more about how much certainty you want and how much risk you can comfortably carry. This guide explains the main types of tariff and the questions to ask before you commit.
Fixed tariffs
A fixed tariff locks in your unit rates and standing charges for a set period, often 12 or 24 months. The advantage is certainty: if wholesale prices rise, your rates stay the same. The disadvantage is that if prices fall, you stay on the higher rate unless you switch away.
Remember that a fixed tariff fixes the rates, not the total bill. If you use more energy than expected, you will still pay more.
Standard variable tariffs
A standard variable tariff, often the default if you have never switched, can change whenever the supplier chooses. In Great Britain these are covered by the Ofgem price cap, so the rates move in step with the cap each quarter. There are no exit fees, so you can leave at any time. You can read more in our guide to the price cap.
Tracker tariffs
A tracker tariff follows a published wholesale or index price, plus a fixed margin, and can change as often as every day. Some people like the transparency and the chance to benefit when wholesale prices fall, but your bills can be unpredictable. They suit households that can reduce or shift their usage and that are comfortable with variation.
Exit fees and switching
Some fixed tariffs charge a fee per fuel if you leave early. This has to be shown clearly when you sign up. Under Ofgem rules you can usually switch without paying an exit fee in the final 49 days of a fixed deal, so diarise the end date when you sign. Your supplier should also write to you before your fixed deal ends with your new default rates, giving you time to compare.
Questions to ask before choosing
- How long is the deal, and what are the exit fees?
- What are the unit rates and standing charges for each fuel, not just the estimated annual cost?
- What will I be moved to when the deal ends?
- Does the tariff need a smart meter or a particular payment method such as direct debit?
- Does the supplier have a good record for customer service?
Which is right for you?
A fixed tariff tends to suit households on a tight budget who want predictable monthly bills. A variable tariff suits people who want to stay flexible, for example if they plan to move or install solar panels soon. A tracker suits people who are comfortable with some risk and want to engage with the market.
Whichever you choose, base the comparison on your real annual usage in kWh, and check the rates again whenever your deal is about to end. Our guide to switching supplier walks through the process.