Fixed vs variable energy tariffs

What is a variable tariff?

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 July 2026, the cap for a typical dual-fuel household paying by Direct Debit is around £1,660 a year, based on rates of 26.11p/kWh and a 57.19p daily standing charge for electricity, and 7.33p/kWh and a 29.04p 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.

What is a fixed tariff?

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 is cheaper than the current variable rate depends on market conditions at the time; sometimes fixed deals sit comfortably below the cap, and at other times there may be little difference, or even a small premium for the certainty.

Exit fees on fixed tariffs

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.

How to think about the choice

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

If you value predictability

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.

If you want flexibility

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.

If prices are expected to fall

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.

The July 2026 price cap decision

From 1 July 2026 the Ofgem price cap will rise to £1,862 for a typical dual fuel household. Fixed tariffs have been available below that level in June 2026, which is why many households are weighing whether to fix before the new cap takes effect. For a fuller explanation of both options and the factors involved, see our guide on whether to fix before July 2026.

Common questions

What happens when a fixed tariff ends?

Unless you actively choose a new tariff, you'll usually be moved onto your supplier's standard variable tariff, which is subject to the price cap. This is often a good time to compare again, as the variable rate may be higher than your previous fixed rate.

Can a variable tariff go above the price cap?

No. The price cap sets the maximum that suppliers can charge for unit rates and standing charges on standard variable tariffs. It doesn't cap your total bill, which still depends on usage, but the rates themselves can't exceed the capped levels.

Are fixed tariffs always more expensive than variable ones?

Not necessarily. It depends on market conditions when you compare. Sometimes fixed deals are priced below the current cap level because suppliers are competing for new customers; at other times they may be priced close to or above it.

How often can I switch tariffs?

As often as you like, in principle, though if you're on a fixed tariff with an exit fee, switching before the end of the term may incur that fee. There's no limit on switching once you're free to do so.

Do green tariffs tend to be fixed or variable?

Both types exist. Whether a tariff is marketed as green is a separate question from whether it's fixed or variable; see our guide on green energy tariffs for more on what "green" means in practice.