What is a fixed electricity tariff?
On a fixed tariff, the price per kilowatt-hour and usually the daily standing charge stay at the rates in your contract for a set period. Your bill is not fixed: using more electricity still costs more, and your monthly Direct Debit can change if your usage or account balance changes.
Fixing can make the rates easier to budget for and protects you if comparable variable rates rise. The trade-off is that you might pay more if market prices fall. Many fixed deals also have an exit fee if you leave early, so check whether the fee applies per fuel and whether it is charged when moving to another deal with the same supplier.
What is a variable electricity tariff?
A variable tariff has rates that the supplier can change after giving the required notice. A standard variable tariff is the default deal many households move onto when a fixed contract ends. It normally has no fixed end date and offers more freedom to switch.
In England, Scotland and Wales, Ofgem’s price cap protects households on standard variable and default tariffs. The cap limits applicable unit rates and standing charges, not the total bill, and Ofgem updates it every three months. It does not protect a fixed tariff. Northern Ireland has a separate electricity market and no Ofgem household price cap.
Fixed vs variable: the practical trade-offs
A fixed deal buys price certainty, not a guaranteed saving. A variable deal gives you flexibility and the chance to benefit when capped or supplier rates fall, but it also exposes you to increases. Your best option depends on the rates available today, your annual use, the contract terms and how much uncertainty you can comfortably absorb.
- Fixed tariff: predictable rates; possible exit fee; you may miss later price falls.
- Variable tariff: rates can change; usually easier to leave; future costs are less certain.
- Time-of-use tariff: a separate type with different peak and off-peak prices; compare it using the hours when you actually consume electricity.
- Prepayment or standard credit: available rates and payment discounts can differ from Direct Debit offers.
How to compare two electricity tariffs properly
Find your annual electricity use in kWh on a recent bill or online account. Then collect the unit rate, daily standing charge, contract length and exit fee for each offer. Use prices that apply to your region, payment method and meter type; national averages are not a substitute for a personal quote.
Calculate: annual electricity cost = (annual kWh × unit rate) + (365 × daily standing charge). Convert pence to pounds, and use the same annual kWh for every offer. For Economy 7 or another multi-rate tariff, calculate each register separately before adding the standing charge.
Do not compare only the projected Direct Debit. It is a payment plan that can include account credit or debt. The tariff comparison should use energy charges on a consistent basis, with any genuine discount or reward included only if you meet its conditions.
Worked example: when the lower unit rate wins
Suppose a household uses 2,700 kWh a year. An illustrative variable offer charges 26p per kWh and 55p per day. An illustrative fixed offer charges 24.5p per kWh and 60p per day. These are examples, not current market quotes.
The variable tariff costs £902.75 a year: (2,700 × £0.26) + (365 × £0.55). The fixed tariff costs £880.50: (2,700 × £0.245) + (365 × £0.60). At unchanged rates and use, the fixed option is £22.25 cheaper for the year.
The fixed tariff’s standing charge is £18.25 more a year, but each kWh is 1.5p cheaper. Divide £18.25 by £0.015 to get a break-even point of about 1,217 kWh. Above that use, the fixed offer is cheaper on these rates; below it, the variable offer is cheaper. A £75 exit fee would outweigh the £22.25 saving if the household left early and the fee applied.
- Variable: £702.00 usage + £200.75 standing charge = £902.75.
- Fixed: £661.50 usage + £219.00 standing charge = £880.50.
- Illustrative annual difference: £22.25 in favour of the fixed offer.
Check the contract before you fix
Read the tariff information and terms before agreeing. Check the end date, exit fee, payment method, whether both the unit rate and standing charge are fixed, and what happens when the term ends. Look for any condition attached to a discount, smart-meter installation or bundled service.
Citizens Advice says households in Great Britain can leave a fixed tariff without an exit fee when 49 days or less remain. With 50 days or more left, an exit fee may apply. Ofgem says you have 14 days to cancel a household switch if you change your mind. Confirm the current terms for the specific offer rather than assuming every supplier handles fees identically.
When a fixed tariff may suit you
A fix may suit you when its full annual estimate is competitive, you value stable rates and you are unlikely to move or switch during the term. It can also be reasonable when a possible future increase would be difficult for your budget, even if the fixed quote is not the absolute cheapest today.
Do not fix solely because a supplier says prices might rise. Compare at least the complete annual cost, exit fee and contract length. No one can know with certainty whether a fixed deal will beat future variable rates.
When a variable tariff may suit you
A variable tariff may suit you when flexibility matters, you expect to move, you want to wait for other deals, or the available fixes cost materially more. It can also let you benefit if rates fall, although they can rise again later.
If you stay variable, note the next rate-change date and keep your supplier’s notices. Take a meter reading when rates change so the bill can separate use accurately. In Great Britain, remember that a new price-cap headline does not tell you your exact regional rates or cap your total spending.
Northern Ireland: compare deals separately
Northern Ireland is not covered by Ofgem’s Great Britain price cap. The Utility Regulator approves the maximum tariffs charged by regulated supplier Power NI, while other suppliers compete in the market. Use the Consumer Council’s independent comparison tool or tables and check discounts, contract length and exit charges directly.
The Utility Regulator advises checking whether you are on a fixed-term contract and whether leaving early brings a cancellation charge. Its switching guidance also says the new supplier should provide the contract terms. Do not apply Great Britain’s cap rates or switching timetable to a Northern Ireland comparison.
A five-minute tariff decision checklist
Use the same annual kWh and payment method across every quote. Calculate the annual energy charge, add any unavoidable fees, and note what would happen if you moved or prices changed. Choose based on the complete cost and contract—not a teaser saving or one attractive rate.
- Copy your annual kWh from an actual bill or supplier account.
- Record every unit rate and the daily standing charge.
- Calculate a like-for-like annual cost and check whether VAT is included.
- Read the term, end date, exit fee and discount conditions.
- Set a reminder before the fixed term ends or the next variable-rate review.
Fixed and variable tariff FAQs
Does a fixed tariff mean my electricity bill cannot change?
No. The tariff rates are fixed, but the bill still changes with the amount of electricity you use. A supplier can also adjust your Direct Debit to reflect forecast usage or an account balance.
Is a fixed electricity tariff protected by the Ofgem price cap?
No. The Great Britain price cap protects standard variable and default tariffs. A fixed tariff follows the rates and term in its contract, so compare those rates directly with current alternatives.
Can I leave a fixed energy tariff early?
Usually yes, but an exit fee may apply. Citizens Advice says that in Great Britain you can switch without an exit fee when 49 days or less remain on a fixed contract. Check the specific contract and ask the supplier if unsure.
Should I fix before the energy price cap changes?
Not automatically. Compare the fix with your personal variable rates, annual use, standing charge, term and exit fee. A cap forecast is uncertain and the headline cap is not the maximum bill for your household.
Do fixed and variable tariffs work the same in Northern Ireland?
No. Northern Ireland has a separate market and is not covered by Ofgem’s price cap. Compare local supplier offers through the Consumer Council and check the Utility Regulator’s guidance and the supplier’s contract terms.
Estimate your electricity bill
Enter your annual or recent meter readings with each tariff’s unit rate and standing charge. Run the calculation once for each offer, using the same usage and number of days, then compare like with like.
Sources
Tariff definitions, price-cap coverage, switching rules and Northern Ireland differences were checked against these regulator and consumer sources on 6 October 2026: