Fixed vs Variable Energy Tariffs – Find the Best Deal for You

Find out whether a fixed deal or variable tariff is right for your home — and see how much you could save today.

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Picking between a fixed rate tariff and a variable rate tariff can feel like a hard choice for UK homes. A lot of people want to lower their energy price. In the UK, prices can go up and down a lot because of the energy price cap. The energy market also gets new deals from time to time. If you get to know your options, you can find the cheapest option for your home. A little time to look at fixed rate tariffs and other options can help you understand which tariff works best. This will help you use less, save more, and handle your energy price.

This guide explains the way each tariff works. It tells you what the energy regulator Ofgem says about all of them. You will get to see the pros and cons for every option. This guide will also help you know how to make the right choice for your energy use at home.

What is a Fixed Energy Tariff?

A fixed energy tariff means that the unit price (in pence for each kWh) and the standing charge will not change during your contract. The contract can last for 12, 18, or 24 months. This applies to both dual fuel and single fuel tariff options.

With this tariff, you always know what the price will be. The unit price and standing charge stay the same for the whole time you have agreed. This makes it easy for people to plan and pay their bills without any shock from new costs.

Your total bill will still change based on the amount of energy you use. The standing charge and the unit of energy stay the same while you are in the contract. This gives you peace of mind. You know what price you will pay for each kWh, even if the price of energy on the grid goes up.

Key Features of a Fixed Rate Tariff

  • Fixed price per unit: You will pay the same set price for each unit of gas or electricity for the whole time you have the contract. The cost will not be higher or lower during this period.
  • Exit fee: A lot of fixed plans will have an early exit fee. You must pay this if you want to end your contract before its final date.
  • Direct debit discounts: Many fixed deals ask you to pay with direct debit. If you use this way to pay, you can often save some money.
  • Smart meter compatibility: A fixed deal will usually work with a smart meter. A smart meter let you track your energy use easily.
  • Online account access: Most energy companies will give you an online account. This lets you check your bill and see how much you use.

What is a Variable Energy Tariff?

A variable rate tariff is a type of energy tariff where the unit price and standing charge can change. These go up or down based on the energy price cap set by Ofgem, the energy regulator. The price cap helps control how much you pay for your unit price and standing charge. You may find that these costs change from one year to the next. So, you need to follow the price cap set by Ofgem now so you will know what you pay for your energy tariff.

Most people in the UK are on a standard variable tariff. You will be put on this tariff if you do not choose a fixed deal. A variable tariff is the one that most people get by default. If you want to have a fixed deal, you need to pick it yourself. The standard variable tariff is the one you see most in the UK.

Key Features of a Variable Rate Tariff

  • Linked to price cap: The price can go up or down every three months. This happens in January, April, July, and October.
  • No exit fee: Most variable deals let you move to a new plan when you want. You do not pay an exit fee.
  • Flexibility: A deal like this can be good if you think the price of energy will get lower.
  • Risk of price rise: Your bill can get higher if the energy market or the price of energy goes up.

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Fixed vs Variable Energy Tariffs: At a Glance

Feature Fixed Energy Tariff Variable Energy Tariff
Unit price Locked for contract length Moves with Ofgem price cap
Standing charge Fixed Can change with price cap
Exit fee Often £30–£75 per fuel Usually none
Flexibility Limited until contract ends High – switch anytime
Risk Overpay if prices fall Higher bills if prices rise
Peace of mind Yes, predictable bills No, prices may change quarterly
Fixed vs Variable Energy Tariffs: At a Glance

Should I Fix My Energy Prices in 2025?

This is a key question many UK households are asking now.

From 1 October 2025, Ofgem’s energy price cap for a typical dual-fuel household paying by Direct Debit will rise by 2 %, moving from £1,720 to £1,755 per year.

So what does that mean for you?

  • If wholesale prices stay steady or increase, locking in a fixed tariff now could protect you from future price rises.
  • If prices fall, a variable tariff tied to the price cap may allow you to benefit from those reductions.
  • Remember: fixed tariffs offer stability, but at the risk of overpaying if the market softens. Variable tariffs offer flexibility, but your bills may jump with the price cap.

Before making a decision, it’s a good idea to compare energy deals currently on the market. That way you can see if a fixed tariff really works out cheaper than sticking with a variable option.

Pros and Cons of Fixed Rate Tariffs

Pros

  • Price certainty: The unit price for every kWh is always the same. It does not go up or down.
  • You get peace of mind when you plan your budget, especially in winter.
  • This may be the cheapest option if prices go up during your contract.

Cons

  • You have to pay an exit fee if you leave before your deal is up.
  • You could pay more if the wholesale costs go down.
  • There is not much access to new tariffs, so you may need to wait until your deal ends.

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Pros and Cons of Variable Rate Tariffs

Pros

  • No early exit fee – you can change plans at any time.
  • This can help if price cap predictions show the price may go down.
  • It's good for people who want to be flexible and not be locked in for a long time.

Cons

  • Your bills go up when the energy price cap is higher.
  • You cannot plan your money for a long time.
  • It can be a bigger risk if you use a large amount of energy.

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How Do Energy Suppliers Set Tariffs

How Do Energy Suppliers Set Tariffs?

UK energy suppliers need to follow rules set by the energy regulator Ofgem. The rules are there so that people in the UK get fair treatment. They also make sure the energy companies should give good service to all. Ofgem not only makes these rules but also keeps checking what energy suppliers do. Because of this, UK homes get the right energy and feel protected.

  • The energy price cap be the highest unit price and standing charge you pay on standard variable tariffs.
  • You can get better fixed price offers when suppliers buy your energy up front.
  • How you pay is key. Paying by direct debit most times is cheaper than paying your bill after or using a prepayment meter.
  • The type of meter you have—like a credit meter, smart meter, or storage heaters—can also change what deals you get.

How Much Does Energy Cost in the UK?

As of July 2025, the typical home with a standard variable tariff pays about £1,720 every year using direct debit. This is based on using around 2,700 kWh of electricity and 11,500 kWh of gas in a year. The cost will stay the same if you use the same amount of energy and keep your variable tariff. You can pay your bill with direct debit.

Breakdown of Energy Costs (Average July 2025 Price Cap)

Charge Type Electricity Gas
Unit price ~22 pence per kWh ~5.5 pence per kWh
Standing charge ~60 pence per day ~32 pence per day

These numbers go up or down depending on the place you live and the amount of energy you use. If you have a prepayment meter, you might pay more for it.

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What About Renewable Energy Tariffs?

Some suppliers offer payments that can stay the same, and some that can go up or down. These prices depend on renewable energy sources like wind and solar.

  • These tariffs can be a fixed price or they can be a variable rate.
  • There are EV tariffs that help with charging electric vehicles. Most of these give you a lower kWh price at night.
  • This is not always the cheapest option. But many people choose it since it helps the planet.

Estimate your monthly bill with the energy bill calculator

Who Should Choose a Fixed Tariff?

  • The households who want peace of mind and need their energy bills to stay steady.
  • Families who use a high amount of energy and feel that the price rise would hurt them the most.
  • People who feel worried about the risk of a winter price rise.

Who Should Choose a Variable Tariff?

  • Households that want to be able to go at any time and not have to pay an exit fee.
  • People who feel that the price cap or price cap predictions will go down.
  • Those who use storage heaters or have EV tariffs and want to move quickly when a new offer comes up.
Who Should Choose a Variable Tariff

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Are fixed energy tariffs currently cheaper than variable ones?

As of July 2025, most people in the UK have the standard variable tariff for their energy bills. This tariff changes with the energy price cap that Ofgem sets. If you pay by direct debit, you can expect to spend about £1,720 each year for energy in a UK home with average energy use. The price cap and the kind of tariff you have will change how much you pay.

Some suppliers offer fixed rate tariffs. These can be more than the unit price and standing charge that come from the price cap now. But with fixed rate deals, you can stay safe from any price rise in October or December if what it costs suppliers to provide energy goes up.

A fixed energy tariff may be cheaper or not for two reasons:

  • Price cap predictions: When the experts say the price cap will go up, fixing your price now can be the cheapest option for the next year. This way, you know what you will pay and do not get caught by price jumps.
  • Your amount of energy use: If you use a lot of energy at home, getting a fixed price deal could help you. Even if it costs a bit more than the current variable deal, you still get to know your bills will not change. This works best for people that use more energy.

Fixed tariffs may not always cost less right now. But they can help you save money over time if the cost of energy goes up later in the year. This is a good way for you to plan and feel sure about what you will pay.

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How to Compare Fixed vs Variable Energy Tariffs

The best way to decide between fixed and variable tariffs is to compare energy prices side by side, looking at unit rates, standing charges, and overall yearly costs.

When you run a comparison:

  1. Type in your postcode.
  2. Add how much energy you use. You can find this on your bill or smart meter or from comparison sites that can show you how much energy you're using
  3. Choose your type of meter. The options are credit, prepayment, or smart.
  4. Now, you will see options for fixed rate tariffs and variable rate tariffs.

This can help you know the cost of energy in your home. You also get to look for the cheapest option out there.

Check prepayment meter tariffs for tighter spend control

FAQs about Fixed vs Variable Energy Tariffs

A fixed rate tariff means the unit price you pay and your standing charge stay the same during your contract. A standard variable tariff is different. The energy price for this tariff goes up or down with the Ofgem energy price cap every three months.

Most fixed deals have an early exit fee. The exit fee is usually between £30 and £75 for each kind of fuel. But, some suppliers do not make you pay this early exit fee. It is good to read the terms before you join.

Yes, you may have to pay an exit fee. But if you have 49 days or less left on your contract, the Ofgem rules say the supplier cannot charge you an exit fee.

Yes. There are times when it can be cheaper if the price of energy goes down. But if the price cap goes up, then your bills will go up too.

The Ofgem energy price cap changes every three months. You will see updates to the cap in January, April, July, and October. This helps make the energy price fair for all of us. With each update, the price cap can go up, down, or stay the same. The energy price cap works to keep people safe from very high costs. Ofgem looks at energy costs and sets the new price cap every period. So, each January, April, July, and October, your energy bills get a new price.

They can be either one. Some plans have a fixed price, and they use renewable energy sources. Other plans have a variable rate model.

Yes. Prepayment meters and storage heaters can cost people more to use. But, if you use direct debit with smart meters, you often get the lowest prices.

You can check and compare energy prices from every UK supplier. You will see fixed energy tariff deals next to ones with a variable rate. You can look at each tariff to find what is good for you. This helps you get a UK energy tariff that fits your needs.

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*Average yearly cost looks at the lowest price from Free Price Compare. When you compare this to the April 2025 price cap, it is £1,617 compared to £1,849. A typical dual fuel customer can save £231. Actual savings will depend on how much energy you use. The numbers use Ofgem’s Typical Domestic Consumption Values of 2,700 kWh for electricity and 11,500 kWh for gas. This price is for people who pay by direct debit and get paperless bills. These prices are correct from 1 April 2025 and do not include any cashback.

**On average, it takes 4 minutes to complete an energy switch through Free Price Compare.

Page last updated on: 09/09/2025

Page reviewed by: Andrea Troy

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