Energy & Utilities

Fixed vs Variable Energy Tariffs UK — Which Is Best?

Should you fix your energy rate or stay on a variable tariff? How to decide based on price cap forecasts, your circumstances, and risk tolerance.

· 4 min read

Choosing between a fixed and variable energy tariff can save (or cost) you hundreds of pounds. Understanding how each works — and what is happening to energy prices — helps you make an informed decision.

Fixed vs Variable: Quick Comparison

Feature Fixed Tariff Variable Tariff (SVT)
Price per unit Locked for 12–24 months Changes quarterly (with price cap)
Certainty High — know your rate Low — changes 4 times/year
Exit fees None since 2020 None
Best when Prices expected to rise Prices expected to fall
Risk May miss out if prices fall Pay more if prices rise

How Each Works

Fixed Tariff

Aspect Detail
What’s fixed Unit rate (p/kWh) and standing charge
Duration Typically 12 or 24 months
Your bill Still varies with usage, but rate is stable
At end of term Moves to SVT (shop around before this)
Can you leave early? Yes — no exit fees

Variable Tariff (Standard Variable Tariff / SVT)

Aspect Detail
Pricing Set by supplier, up to the price cap
When it changes Usually quarterly, following Ofgem’s price cap review
Protection Cannot exceed price cap
Flexibility Can switch to a fixed deal anytime
Default What you’re on if you don’t actively choose

When to Fix

Scenario Recommendation
Fixed rate below current price cap Fix — lock in savings
Fixed rate significantly above cap Stay variable
Prices expected to rise Fix — protect against increases
Prices expected to fall Stay variable — benefit from drops
Want budget certainty Fix — easier to plan
No exit fees Low risk to fix

Current Market Guidance

Market Condition Strategy
Fixed deals below price cap Consider fixing — you save now and are protected if cap rises
Fixed deals above price cap Stay on SVT unless you strongly believe prices will spike
Fixed deals about same as cap Personal preference for certainty vs flexibility
High volatility expected Fixing reduces risk

The “No Exit Fee” Advantage

Since 2020, you can leave a fixed tariff at any time:

Old Rules Current Rules
Exit fees up to £60+ per fuel No domestic exit fees
Locked in or pay to leave Switch whenever you want
Risk of being stuck on bad deal No risk — just switch if better deal appears

This means:

  • Fixing is much lower risk than before
  • You can fix to protect against price rises
  • If prices fall significantly, just switch away
  • Best of both worlds (mostly)

Comparison Example

Assuming price cap of 28p/kWh electricity, 7p/kWh gas:

Tariff Electricity Rate Gas Rate Result
SVT at price cap 28p/kWh 7p/kWh Changes each quarter
Fixed at 26p/6.5p 26p/kWh 6.5p/kWh Saves ~7% vs cap now
Fixed at 30p/7.5p 30p/kWh 7.5p/kWh Costs ~7% more vs cap now

Illustrative figures — actual rates vary.

Predicting Energy Prices

Source What It Shows
Ofgem price cap announcements Next quarter’s maximum rates
Wholesale market forecasts Where energy is trading
Expert predictions Cornwall Insight, energy analysts
Comparison sites Whether fixed deals are above/below cap

Why Predictions Are Difficult

Factor Impact
Global gas prices Volatile
Geopolitical events Unpredictable
Weather Affects supply and demand
Renewable output Wind/sun variability
Government policy Subsidies, price interventions

Other Tariff Types

Tariff Type How It Works Best For
Tracker Follows wholesale prices (plus margin) Risk-tolerant customers
Time-of-use Different rates at different times Those who can shift usage
Agile (Octopus) Half-hourly pricing Very engaged customers
EV tariff Cheap overnight charging Electric car owners
Green/renewable Renewable energy backing Environmentally focused

How to Decide

Quick Decision Guide

Question Yes No
Are fixed rates below current cap? Consider fixing Stay variable
Do you value predictable bills? Fix Variable fine
Do you expect prices to rise? Fix Stay variable
Do you check energy deals regularly? Either — you’ll switch if needed Fix for peace of mind
Are you on a tight budget? Fix — certainty helps budgeting Either

Step-by-Step Decision

Step Action
1 Check your current tariff and rate
2 Compare fixed deals on comparison sites
3 Check if fixed is above or below cap
4 Consider price cap forecasts
5 Decide what matters more: certainty or potential savings
6 Switch if a better deal exists

Key Points

  1. No exit fees — you can always switch if you find a better deal
  2. Compare to the price cap — fixes below cap are good; above cap, think carefully
  3. Review regularly — set a calendar reminder to check every 3–6 months
  4. Either choice is valid — there’s no “wrong” answer; it’s about your preferences
  5. Don’t stress too much — the price cap protects you on SVT

For more on switching and comparing deals, see our switching energy supplier guide and reduce energy bills guide.