What’s the difference between fixed and variable energy tariffs?

If you’ve used our site to compare energy prices, you may have noticed that they come in two types – ‘fixed’ or ‘variable’. But what’s the difference between fixed and variable energy tariffs, and what should you choose?

Fixed tariffs
When you sign up to a fixed tariff, the amount you’re charged for a unit of energy will stay the same for a set period (usually a year). The total amount you pay could still go up or down depending on how much energy you use.

If you leave a fixed tariff before the end of that set period, you’ll sometimes be charged a penalty fee, which will be added to your final bill. And when you come to the end of a fixed tariff, you’ll usually roll onto the suppliers’ most expensive variable tariff, so remember to switch again before this happens.

Variable tariffs
When you’re on a variable rate tariff, your supplier can increase or decrease the amount they charge you for a unit of energy, providing they give you advanced warning. Unlike fixed tariffs, there’s no charge for leaving a variable tariff, so if the price does change, you’re free to go elsewhere.

Which is right for you?
Knowing the difference between fixed and variable energy tariffs is important when you’re choosing the right energy plan for you. If you want the certainty of knowing that the price of the energy you’re buying won’t change for a set period, opt for a fixed tariff. If you don’t mind uncertainty (and remember prices can go down as well as up) and would rather not have to switch at the end of every fixed term deal, then a variable rate may be better for you.

How your quote is calculated
When you come to the end of a fixed rate tariff, you’re likely to drop onto your supplier’s most expensive variable rate tariff. Our site will take that into account when it generates your quote. As a result, the estimate for how much you’ll pay over a year will factor in any extra cost associated with rolling onto your supplier’s variable rate.