Fixed vs Variable Tariffs: Which Is Cheaper Right Now?

Every energy tariff sold in Britain is one of two types: fixed or variable. The difference sounds simple, but it decides whether your bills stay still for a year or move every three months — and in a market where prices are forecast to rise, picking the wrong type can cost you real money. This guide explains how each tariff works, what they cost at October 2026 prices, and how to work out which suits your household.

What is a variable tariff?

A variable tariff — usually called a standard variable tariff, or SVT — has unit rates that can go up or down. Most variable tariffs are covered by Ofgem’s price cap, which limits the maximum unit rate and standing charge a supplier can set. The cap is reviewed every three months, so on a variable tariff your prices change in January, April, July and October, in line with the new cap.

You are on a variable tariff if you have never switched, if your fixed deal ended and you did nothing, or if your supplier moved you onto one. There are no exit fees, so you can leave at any time, and your prices track the market with a delay of a few months. For the detail on the cap itself, see our energy price cap explained guide.

What is a fixed tariff?

A fixed tariff locks in your unit rates and standing charges for a set period, usually 12 months. Whatever happens to the price cap or to wholesale markets during that year, your rates stay the same. What is not fixed is your bill: you still pay for what you use, so a cold winter means a bigger bill even on a fixed tariff.

Fixed tariffs are not covered by the price cap — the contract sets the price instead. Most fixes charge exit fees if you leave early, typically around £25 to £50 per fuel, although some suppliers offer no-exit-fee fixes at slightly higher rates.

What do they cost right now?

At the October 2026 price cap, a typical household on a variable tariff pays £1,723 a year (based on 2,500 kWh of electricity at 26.32p per kWh with a 54.83p daily standing charge, and 9,500 kWh of gas at 7.97p per kWh with a 29.68p daily standing charge).

Fixed deals priced below the cap do exist this autumn. The cheapest fixes in early October 2026 were advertised at roughly 5–8% below the cap for typical use, which works out at a saving of around £90–£140 a year for that typical household. Those headline savings are calculated using the same typical usage figures, so if your home uses much more or less than average your saving will differ — annoying, but easy to check using your own annual figures from a recent bill.

Standing charges matter here, too. Some fixed deals shave the unit rate but carry high daily charges, which penalises low users in particular. Always compare both numbers, not just the unit rate — our guide to standing charges explained shows how quickly they add up over a year.

Where are prices heading?

The cap is set for October to December 2026 at £1,723. The next change is on 1 January 2027, announced on 25 November 2026, and forecasters expect a rise. Cornwall Insight forecast on 30 September 2026 that the January cap would come in at around £1,999 a year — a rise of about 16%. That figure is a forecast, not a confirmed price: wholesale markets move, and forecasts are routinely revised up and down before Ofgem confirms the real number.

This is why the fixed-versus-variable question is live right now. If the January rise happens, variable customers’ prices go up automatically, while anyone who fixed in the autumn keeps their lower rates. If prices then fall later in 2027, the position reverses: fixed customers are stuck at their rate (or pay exit fees to leave) while variable customers benefit at the next cap change.

The case for fixing

• Certainty. Your rates cannot rise for the length of the deal, which makes budgeting straightforward.
• Protection against the forecast January rise. Fixing below today’s cap insulates you from the expected increase.
• No surprises. Quarterly cap announcements stop mattering until your deal ends.

The case for staying variable

• Flexibility. No exit fees — you can switch the moment a better deal appears.
• You benefit quickly from falls. If prices drop, the cap follows within a quarter.
• No lock-in risk. Forecasts can be wrong; if January’s rise doesn’t happen, fixers may have paid over the odds for certainty.

How to decide

Start with your own usage. Find your annual kWh for gas and electricity on a recent bill or annual statement, then price up both options with those numbers. A saving quoted on “typical” usage is only a guide.

Then weigh three things: the size of the saving (a fix saving less than about £50 a year over the current cap may not be worth the exit fees), the exit fee itself, and how much you value stable bills. Households with high usage gain the most from a lower unit rate, so fixing tends to suit them best. Very low users should look hardest at standing charges, which make up a bigger share of their bill.

Finally, diarise the end of any fix. When it expires you roll onto the variable tariff by default, and the cheapest approach is to line up a new deal in the last few weeks rather than drift.

Frequently Asked Questions

Can my supplier raise prices on a fixed tariff?

No. The unit rates and standing charges are set for the term of the contract. Your bill can still change if your usage changes, and a supplier can withdraw a fixed deal from sale, but existing customers keep the agreed rates.

What happens when my fix ends?

You move automatically onto your supplier’s standard variable tariff, priced up to the level of the cap. Suppliers must notify you before your deal ends, and you can switch without exit fees in the final weeks of the term (usually the last 49 days).

Is a tracker tariff the same as a variable tariff?

Not quite. A tracker follows wholesale prices directly, changing frequently — often daily — and is not protected by the price cap. A standard variable tariff changes only when the supplier reprices it, usually in step with the cap.

Should I fix now, before the January announcement?

If you find a fix priced below the current cap with exit fees you can live with, fixing now protects you against the forecast rise, which forecasters currently consider likely. If certainty matters less than flexibility, staying variable and reviewing in November, once Ofgem has announced the confirmed January cap, is also a reasonable strategy. If you are not sure what your current tariff is, our walkthrough of how to read your energy bill shows exactly where the tariff name and rates appear on the page.