How variable tariffs work
When certainty may be valuable
When flexibility may be valuable
How to compare fairly
What a fixed tariff fixes
A fixed tariff generally fixes the unit rates and standing charges for a set period. It does not fix your total monthly or annual bill because that still depends on consumption. Some fixed deals have exit fees, so check the contract before switching again.
How variable tariffs work
Variable tariff rates can change. Eligible default tariffs are protected by the Ofgem price cap, which limits the unit rates and standing charges suppliers can charge rather than placing a hard ceiling on the total bill. The cap is reviewed regularly and can move up or down.
When certainty may be valuable
Households that value budgeting certainty may prefer knowing the rate they will pay for each unit during a fixed term. That can be particularly useful when energy-price expectations are volatile. The trade-off is that you may remain on a higher fixed rate if market prices later fall.
When flexibility may be valuable
A variable tariff may suit someone who wants to avoid a long commitment or exit fees. However, rates can change, so budget forecasts are less certain. Read the supplier’s notice rules and payment terms.
How to compare fairly
Compare the annual cost using the same consumption figure. Include standing charges, exit fees that might realistically apply and any one-off incentives separately. Do not choose a fixed deal merely because the word “fixed” sounds like the whole bill is guaranteed.
When exit fees matter
If you might move home, change supplier or expect a better tariff soon, an exit fee can reduce the value of a fixed deal. Compare the potential saving over the period you realistically expect to stay, not just the headline annual estimate.
Price certainty versus flexibility
A fixed tariff normally fixes the unit rate and standing charge for a defined period, not your total bill. A variable tariff can move with supplier pricing and, where applicable, the Ofgem cap. The better choice depends on the rate offered, your appetite for future price changes and any exit fees.
Supplier tariffs, price-cap rates and referral campaigns can change. Check live official information before making a switching decision.
