# Fixed vs Variable Energy Tariffs: How to Compare Them

> Understand unit rates, standing charges, exit fees and price changes so you can compare UK energy tariffs using your household's actual energy use.

Canonical URL: https://serynix.com/blog/fixed-vs-variable-energy-tariffs/
Author: Serynix Editorial Team
Published: 2026-10-27
Updated: 2026-10-27
Language: en
Topic: Money & Rights
Geographic scope: United Kingdom

Choosing between fixed vs variable energy tariffs can feel like a gamble. A fixed deal gives you more certainty about your energy prices, while a variable tariff lets those prices change. But neither option is automatically cheaper, and the wrong comparison can leave you paying more than necessary.

The useful question is not simply whether to fix your energy prices. It is whether a particular deal offers better value for your household, considering how much gas and electricity you use, the daily standing charges, and any fees for leaving early.

Here is how to compare energy tariffs without getting distracted by advertised monthly payments or headline savings.

## What Is the Difference Between Fixed and Variable Energy Tariffs?

A fixed energy tariff keeps your agreed unit rates and standing charges unchanged for a set contract period, usually around 12 months, although other terms are available.

A variable energy tariff allows your rates to change. If you are on a standard variable tariff, your supplier will usually adjust its rates in response to changes in the Ofgem price cap. Your supplier must follow the applicable rules when changing prices.

| Feature | Fixed energy tariff | Standard variable energy tariff |
|---|---|---|
| Unit rates | Stay the same during the contract | Can change |
| Standing charges | Stay the same during the contract | Can change |
| Contract | Usually has a set end date | Usually open-ended |
| Exit fees | May apply if you leave early | Generally none |
| Protection from price rises | Your agreed rates stay unchanged | Your rates may rise |
| Benefit if rates fall | Your agreed rates do not automatically fall | Your rates may fall |
| Budget certainty | Greater certainty over rates | Less certainty over future rates |

One important distinction: **a fixed tariff fixes your prices, not your bill.** If you use more energy during a cold winter, your bill can still increase because you are paying for more units.

Variable tariffs also come in different forms. Standard variable tariffs are not the same as every tracker or time-of-use tariff. Some specialist tariffs have different pricing rules and may expose you to greater price fluctuations.

## What Are Unit Rates and Standing Charges?

Before comparing fixed and variable deals, understand the two main parts of your energy tariff.

### Unit rate

The unit rate is the amount you pay for each kilowatt-hour (kWh) of electricity or gas you use. Gas and electricity have separate rates, even when you buy both from the same supplier.

For example, if your electricity rate is 25p per kWh and you use 100 kWh, your usage charge is £25 before standing charges and any other applicable adjustments.

### Standing charge

The standing charge is a daily fee you pay for your energy supply, regardless of how much energy you use. You will generally pay it even if you use very little energy during a particular period.

That is why comparing only unit rates can lead to the wrong decision. A tariff might offer cheaper electricity per kWh but charge a higher daily standing charge.

For households with low energy consumption, standing charges can make a particularly noticeable difference. Someone who uses little energy may benefit from a different balance of unit rates and standing charges than a household with high consumption.

## How to Compare Energy Tariffs Using Your Actual Usage

The most reliable way to compare tariffs is to estimate what each would cost over a full year using your own consumption.

### Step 1: Find your annual energy usage

Check your latest bill or online account for your annual electricity and gas consumption in kWh. Using the previous 12 months is generally more useful than relying on a supplier's typical household estimate.

If you have recently moved, changed your heating system or started charging an electric vehicle at home, your previous usage might not reflect your future needs. In that case, use a reasonable estimate and recognise that the result is less certain.

### Step 2: Record the full tariff details

For each offer, write down:

- Electricity unit rate and daily standing charge.
- Gas unit rate and daily standing charge, if applicable.
- Contract length and exit fees.
- Any discounts or credits, including their eligibility conditions.
- Payment method requirements and any relevant meter restrictions.

Check whether the offer is available to existing customers, whether it requires a smart meter, and whether the quoted annual cost assumes Direct Debit payments.

### Step 3: Calculate the annual cost

Use this formula for a straightforward single-rate tariff:

**Annual cost = energy usage charges + annual standing charges**

For a dual-fuel household, that means:

- Electricity usage in kWh multiplied by the electricity unit rate.
- Gas usage in kWh multiplied by the gas unit rate.
- Electricity daily standing charge multiplied by 365.
- Gas daily standing charge multiplied by 365.

Add the four figures together, then account for any applicable discounts or fees according to their terms.

### A worked example

Suppose a household uses 2,700 kWh of electricity and 11,500 kWh of gas each year. The two hypothetical tariffs below show why you need to compare the complete cost rather than one attractive rate.

These figures are illustrative only, not live supplier offers.

| Annual cost component | Tariff A: Fixed | Tariff B: Variable |
|---|---:|---:|
| Electricity rate | 24p/kWh | 25p/kWh |
| Gas rate | 7p/kWh | 7.2p/kWh |
| Electricity standing charge | 55p/day | 50p/day |
| Gas standing charge | 30p/day | 28p/day |
| Electricity usage cost | £648.00 | £675.00 |
| Gas usage cost | £805.00 | £828.00 |
| Annual standing charges | £310.25 | £284.70 |
| **Estimated annual total** | **£1,763.25** | **£1,787.70** |

In this example, the fixed tariff costs £24.45 less over a year. Its lower unit rates make up for its higher standing charges.

However, the difference is relatively small. An exit fee, a discount that does not apply to you, or a change in your consumption could affect the overall value. The example also assumes the variable rates remain unchanged for the entire comparison period, which cannot be guaranteed in real life.

The lesson is to compare the annual costs using the same usage figures and include all relevant charges.

## How Does the Ofgem Energy Price Cap Affect Your Decision?

The Ofgem energy price cap limits the unit rates and daily standing charges suppliers can charge on covered standard variable domestic tariffs. It does not cap the total amount every household will pay. Your bill still depends on your consumption.

Ofgem reviews the price cap every three months. That means a household on a standard variable tariff may face different rates as a new cap period begins.

For context, the headline price-cap figure for 1 October to 31 December 2026 is £1,723 a year for a typical dual-fuel household paying by Direct Debit in England, Scotland and Wales. This is an illustrative annual figure based on typical usage, not a maximum bill or a quote for your home.

You can check the latest regional unit rates and standing charges in [Ofgem's official price-cap tables](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges).

A fixed tariff is not protected by the price cap in the same way as a covered standard variable tariff. Instead, the agreed rates normally remain unchanged for the contract term.

If the price cap rises, fixing may protect you from higher variable rates. If the cap falls, your existing fixed rates could become more expensive than the available alternatives.

Neither outcome is guaranteed in advance. Avoid choosing a tariff solely because someone predicts that prices will rise or fall.

## Check Fixed Tariff Exit Fees Before Switching

Some fixed energy tariffs charge an exit fee if you leave before the contract ends. The fee can apply separately to electricity and gas, so check whether the quoted amount is per fuel or for the whole account.

Imagine a new tariff appears to save you £70 over the year, but leaving your current deal early would cost £100 in exit fees. Switching immediately would not deliver a saving on those figures.

Your decision may change if the new tariff offers greater savings over the remaining contract period, so calculate the actual difference rather than assuming an exit fee always makes switching a bad idea.

If you have 49 days or fewer remaining on your fixed tariff, you can generally switch without paying an exit fee under the relevant domestic switching rules. Check your supplier's terms and the date your contract ends before making a decision.

Standard variable tariffs generally do not have exit fees, but check the terms of your specific tariff instead of assuming every product described as variable is unrestricted.

## Which Energy Tariff Is Better for Your Household?

A fixed energy tariff may suit you if you prefer predictable rates, find a competitively priced deal and expect to stay with the supplier for most or all of the contract.

A standard variable tariff may suit you if you value flexibility, want to avoid a fixed-term commitment or do not want to risk locking into rates that could become less competitive.

Your circumstances also matter:

- **Low energy use:** Pay close attention to standing charges because they represent a larger share of your total cost.
- **High energy use:** Small differences in unit rates can add up across the year.
- **Moving home soon:** Check exit fees and whether your contract can be transferred to the new property.
- **Electric vehicle or storage heating:** A time-of-use tariff may be worth comparing if you can use a substantial amount of electricity during cheaper periods.
- **Tight monthly budget:** A fixed tariff offers more certainty about rates, but it does not guarantee an identical bill each month.

For a broader consumer guide to choosing between tariffs, see [Citizens Advice's energy tariff guidance](https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-a-better-energy-deal/choosing-energy-tariff/).

If you live in Northern Ireland, check the arrangements applying to your local energy market, as the Ofgem price cap described above applies to Great Britain rather than Northern Ireland.

## A Simple Checklist Before You Switch

Before agreeing to a new tariff, check these points:

1. Have you compared costs using your actual annual gas and electricity usage?
2. Have you included both unit rates and standing charges?
3. Have you checked the contract length and any exit fees?
4. Have you confirmed that the offer suits your meter, payment method and circumstances?
5. Have you compared the fixed deal with your current variable tariff using the same assumptions?
6. Do you understand what happens when the contract ends?

Do not focus only on the monthly Direct Debit shown by a supplier. It may be based on estimated consumption and account balance adjustments, rather than a fixed amount you will owe for the energy used.

## Frequently Asked Questions

### Is a fixed energy tariff always cheaper than a variable tariff?

No. A fixed tariff can be cheaper or more expensive, depending on its unit rates, standing charges, discounts and contract terms. Compare the full estimated annual cost before deciding.

### Can I switch from a fixed tariff to a variable tariff?

Usually, yes, but leaving a fixed contract early may involve exit fees. Check the terms and how much time remains on your contract before switching.

### Does the energy price cap limit my total bill?

No. For covered standard variable tariffs, it limits specified unit rates and daily standing charges. Your total bill depends on how much energy you use.

### Should I fix my energy tariff before prices change?

No one can guarantee future energy prices. Compare the deal available now with your current rates, usage and willingness to accept price uncertainty. Make the decision based on the costs and terms you can verify, not an uncertain forecast.

## Final Thoughts

The best way to compare fixed vs variable energy tariffs is to look at the full cost of each option using your household's actual energy use. Unit rates matter, but standing charges, exit fees, contract length and future price uncertainty matter too.

A fixed deal buys greater certainty about your rates, while a standard variable tariff offers more flexibility. Neither is automatically the winner. Compare the figures, read the terms and choose the arrangement that fits your household rather than relying on a headline price alone.

## Sources and further reading

- [Ofgem - Energy price cap unit rates and standing charges](https://www.ofgem.gov.uk/your-energy-supply/your-energy-bill/energy-price-cap-unit-rates-and-standing-charges)
- [Citizens Advice - Choosing an energy tariff](https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-a-better-energy-deal/choosing-energy-tariff/)