Fixed vs variable energy tariffs

A variable tariff (sometimes called a standard variable tariff, or SVT) has unit rates and standing charges that can change when the supplier's costs change, within the limits set by Ofgem's price cap. Ofgem reviews the cap every three months; in January, April, July, and October; and adjusts it based on wholesale energy costs and other factors.

From 1 October 2026, the cap for a typical dual-fuel household paying by Direct Debit is £1,723 a year under Ofgem's updated typical consumption assumptions, based on rates of 26.32p/kWh and a 54.83p daily standing charge for electricity (0% VAT), and 7.97p/kWh and a 29.68p daily standing charge for gas. If you're on a variable tariff, your rates will move in line with whatever the cap is set to at each quarterly review; they could go up or down.

If you've never actively chosen a tariff, you're very likely on your supplier's standard variable tariff by default. This often happens automatically when a fixed deal ends.

A fixed tariff locks in your unit rates and standing charges for a set period; commonly 12 or 24 months; regardless of what happens to the price cap during that time. This gives you certainty about what you'll be charged per unit, though your total bill will still depend on how much energy you actually use.

Fixed tariffs are offered commercially by suppliers and are available through comparison platforms. Whether a fixed tariff costs more or less than the current variable rate depends on market conditions at the time; the difference can favour either option, or leave only a small gap for the certainty of a fixed rate.

In an Energy Shop comparison on 27 October 2026 (2,500 kWh electricity, 9,500 kWh gas, direct debit, available tariffs only), the fixed deals shown in Manchester, Glasgow and London all cost more per year than each region's standard variable tariff, by £123 to £347. The variable tracker tariffs shown in Manchester and Glasgow cost about £51 less. These prices exclude the temporary removal of 5% VAT on electricity until 31 March 2027. Tariffs and prices change daily and depend on your postcode and usage.

Some fixed tariffs charge an exit fee if you leave before the end of the fixed term. This is shown clearly in comparison results before you apply, and it's worth weighing against the savings on offer; particularly if you might move home or want to switch again before the term ends. Many fixed tariffs now come with no exit fees at all, so it's worth checking rather than assuming. Near the end of a fixed deal, Ofgem's 49-day rule usually lets you switch without paying an exit fee.

Neither option is universally "better"; it depends on what you value and what's available when you compare.

A fixed tariff means you know your unit rates won't change for the length of the contract, which can make budgeting easier. This can be particularly useful if you're concerned about prices rising over the coming months.

A variable tariff (or a fixed tariff with no exit fees) means you're free to switch again whenever a better deal becomes available, without being tied in or facing a penalty.

Some households prefer to stay on a variable tariff during periods when the price cap is expected to fall, so their rates drop automatically at the next review rather than being locked into a higher fixed rate. This is a judgement call based on market expectations, which can be wrong in either direction; Ofgem's quarterly announcements and the run-up commentary from consumer organisations are the main public sources for this.

From 1 October 2026 the Ofgem price cap sits at a headline £1,723 for a typical dual fuel household under updated consumption assumptions. Whether fixed deals cost more or less than a capped variable tariff depends on market conditions when you compare. For the full October breakdown, see our October 2026 price cap guide.