Guide
Fixed vs variable energy tariff — which is right for you?
Fixed and variable energy tariffs offer different trade-offs. Here's how each works, when each makes sense, and what the price cap means for the decision.
How fixed and variable tariffs differ
A variable tariff charges the unit rate and standing charge set by Ofgem's price cap, which is reviewed quarterly. Your rate changes with the cap — down when wholesale prices fall, up when they rise. A fixed tariff locks in a rate for a set period (usually 12–24 months), regardless of what happens to the cap. Fixed rates can be above or below the current cap depending on where the market is when you lock in.
When fixing makes sense
Fixing makes sense when you want certainty, when fixed deals are close to or below the current variable rate, and when wholesale energy prices are volatile or expected to rise. It locks you in, so there is a cost if prices fall. Exit fees (typically £25–£50 per fuel) apply if you switch before the end date, except within the final 49 days of the contract.
The price cap and tracker tariffs
The price cap protects customers on variable tariffs from unlimited exposure to wholesale price spikes — it sets a ceiling on unit rates, not on your total bill. Tracker tariffs follow wholesale prices directly and have no price cap ceiling — they can be very cheap when wholesale prices are low, but carry real risk when prices spike, as happened dramatically in 2022. They suit households comfortable with volatility in exchange for potential savings.