Fixed or Variable: Choosing an Energy Tariff Now

With the price cap having risen 13 per cent in July and the next announcement due in late August, a great many households are wondering whether to fix.

There is no universally correct answer, but there is a correct way to work out which suits you.

Here is how to approach it.

Understand what you are currently on.

A standard variable tariff, sometimes called a default tariff, is what you fall onto if you never switch or if a fixed deal ends. It is the tariff limited by the price cap.

Its rates change when the cap changes, four times a year, in January, April, July and October.

A fixed tariff locks unit rates and standing charges for a set period, typically twelve or twenty-four months. It is not a fixed bill: you still pay for what you use, but at guaranteed rates.

If you are on a fixed tariff, price cap changes do not affect you until it ends.

Check your online account or a recent bill to establish which you are on and, if fixed, when it expires.

Fixing buys certainty, not necessarily savings.

The value of fixing is knowing what you will pay. Whether it saves money depends on what the cap does afterwards, which nobody knows.

If the cap rises above your fixed rate, you gain. If it falls below, you lose relative to having stayed put.

Forecasters have generally suggested the October 2026 cap will hold around current levels or rise, given wholesale market conditions, but forecasts have been wrong repeatedly in both directions since 2021.

For households on tight budgets, the certainty itself has value independent of whether it turns out cheaper, because it makes budgeting possible.

Compare properly, using your own usage.

The single most common comparison error is using the headline annual figure, which assumes typical consumption you may not have.

Find your annual usage in kilowatt hours for both gas and electricity. It appears on your annual statement, and can be found in your online account or by asking your supplier.

Then compare tariffs by multiplying their unit rates by your usage and adding the standing charges. Comparison sites do this automatically if you enter your consumption rather than accepting their defaults.

A tariff that looks cheaper on typical usage may be more expensive for a low user, because of the balance between standing charge and unit rate.

Check exit fees before signing.

Most fixed tariffs carry an exit fee if you leave before the end of the term, typically charged per fuel.

By law, you can leave a fixed tariff without exit fees in the final weeks of the contract, giving you a window to move without penalty.

If you might move house during the term, check the terms. Most suppliers allow you to take a tariff with you or leave without penalty when moving, but this varies.

Consider the length carefully.

A longer fix gives longer certainty but locks you in if prices fall. A shorter fix limits exposure in both directions.

Some suppliers offer tariffs that track below the cap, or that fix but fall automatically if the cap drops. These reduce the risk of fixing at the wrong moment, though they generally price that flexibility in.

Read what happens at the end of the term. Most tariffs roll onto the standard variable rate unless you act, and setting a calendar reminder for a month before expiry is the simplest way to avoid drifting onto the cap by accident.

Smart meters open other options.

Time-of-use tariffs charge different rates at different times of day, with cheaper overnight periods.

These can produce substantial savings for households able to shift consumption, particularly those charging an electric vehicle, running a heat pump or using storage heating, and less benefit for households whose usage is concentrated in peak evening hours.

They require a smart meter operating in smart mode, and they carry risk if your usage pattern cannot move, since peak rates are higher than the standard rate.

Switching is straightforward.

Switching supplier does not involve any interruption to supply, and no engineer visits. The physical connection is unchanged.

The process is generally completed within a few weeks, and you should submit a meter reading on the switch date to ensure accurate final and opening bills.

If you are in debt to your current supplier, switching may be restricted, though rules allow switching with debt below a threshold in some circumstances.

Watch for credit balances.

Direct debit amounts are set to spread annual cost evenly, which means credit builds in summer and depletes in winter.

If a large credit balance has accumulated beyond what winter will consume, you can request a refund. Suppliers must have a clear policy on this.

Equally, if your direct debit looks too low relative to your usage, increasing it slightly is preferable to accumulating debt through winter.

Get help if you are struggling.

If you cannot afford your bill, contact your supplier before missing payments. Suppliers are required to offer affordable payment plans and may have hardship funds.

Citizens Advice provides free energy advice, and the Priority Services Register offers additional support for eligible households.

Share your thoughts.

Are you fixed or on the cap, and has it worked out?