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Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →Compare the annual cost of each offer using your home’s actual electricity and gas consumption, not a supplier’s typical-household illustration. Multiply each fuel’s annual kilowatt-hours by its unit rate, add 365 days of standing charges, then account for contract length, payment method, meter eligibility, discounts, and any early-exit fee. A fixed tariff removes exposure to rate changes for its agreed term but can lock you in; a variable tariff allows rates to move and, for covered default tariffs in Great Britain, is subject to Ofgem’s price cap. The cap limits unit rates and standing charges, not your total bill.
What fixed and variable tariffs actually mean
Fixed tariff
A fixed tariff keeps the agreed electricity and gas unit rates and standing charges unchanged for the contract term. Your bill can still rise or fall because you use more or less energy, but the per-kWh prices and daily charges do not change under the agreement. Fixed deals normally have an end date and may charge an exit fee if you leave before then, so the price certainty comes with a commitment.
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Variable tariff
A standard variable tariff has rates that can change. In Great Britain, covered default tariffs are subject to Ofgem’s price cap, which sets a maximum unit rate and daily standing charge for the relevant period. The cap is not a maximum annual bill: a household using more kilowatt-hours pays more. A variable tariff therefore provides flexibility, but your unit rates can move during the time you remain on it.
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| Feature | Fixed tariff | Variable tariff |
|---|---|---|
| Unit rates and standing charges | Remain fixed for the agreed term | Can change; covered default tariffs are constrained by the applicable Ofgem cap |
| Exposure to future rate changes | Lower during the term | Higher, because the supplier can change rates |
| Leaving early | An exit fee may apply; check the contract | Usually more flexible, subject to the specific terms |
| Bill driven by usage | Yes; fixed prices do not fix your consumption | Yes; the cap does not cap total consumption cost |
Neither label tells you which offer is cheapest for your home. The answer depends on your annual usage, the two rate components, your region and payment method, and how long you expect to stay.
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Collect the right figures before comparing
Have the information Ofgem requests before opening a quote: your postcode, current supplier and tariff, unit rates, and annual energy use. You can compare offers directly with suppliers or through an energy price comparison website. Record the following for each fuel.
- Annual consumption: electricity and gas in kWh for the property, ideally covering the latest 12 months of actual readings or bills.
- Unit rate: pence per kWh for electricity and, where applicable, gas.
- Standing charge: pence per day for each fuel. It is payable even on a day when you use no energy.
- Region and postcode: rates differ by area, so a national illustration is not your quote.
- Payment method: Direct Debit, prepayment and other methods can have different rates or eligibility.
- Meter type: a standard, smart or multi-rate meter can determine which offers and rates you can use.
- Contract term and end date: note how many months of price certainty remain and when the fixed deal ends.
- Exit fee: include any charge for leaving a fixed contract before its end.
- Tariff features: list discounts, credits, bundled services, payment requirements and any conditions shown in the offer.
If your bill gives an annual kWh figure, use that rather than a monthly direct-debit amount. A monthly payment is a budgeting arrangement, not the tariff’s unit price and standing charge.
Understand the 2026 Ofgem price-cap figures
Ofgem’s rates for 1 October to 31 December 2026 provide useful context, but they are averages rather than an individual quote. The figures below are for Direct Debit customers across England, Scotland and Wales. Ofgem says actual rates vary by region, payment method, fuel and meter type. Its displayed gas figure includes 5% VAT; electricity VAT is zero from 1 October 2026 to 31 March 2027.
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problems| Fuel | Average unit rate | Average standing charge | Scope |
|---|---|---|---|
| Electricity | 26.32p per kWh | 54.83p per day | Direct Debit average, England, Scotland and Wales, 1 October–31 December 2026 |
| Gas | 7.97p per kWh | 29.68p per day | Direct Debit average, England, Scotland and Wales, 1 October–31 December 2026; displayed rate includes 5% VAT |
See Ofgem’s unit-rate and standing-charge table for the current regional and payment-specific figures. The cap applies to covered default tariffs; it does not protect a fixed tariff from the contractual rate you agreed, and it does not turn an annual bill into a fixed amount. A high-use home can pay more than a low-use home even when both are on the same capped rates.
Calculate an annual cost on a like-for-like basis
The basic formula
For each fuel, convert pence to pounds and calculate:
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Annual energy cost = annual kWh × unit rate in pounds + 365 × daily standing charge in pounds.
Add the electricity and gas results. Apply the same method to every offer, using that offer’s actual rates and your property’s annual kWh. This is an estimate from the tariff structure, not a supplier quote. Check the offer for taxes, discounts, credits, payment terms and contract conditions before deciding.
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The following is a mathematical illustration, not a typical-bill prediction. Assume a home uses 2,700 kWh of electricity and 11,500 kWh of gas in a year and pays by Direct Debit at the England, Scotland and Wales averages quoted above.
| Fuel | Usage calculation | Standing-charge calculation | Illustrative annual total |
|---|---|---|---|
| Electricity | 2,700 × £0.2632 = £710.64 | 365 × £0.5483 = £200.12 | £910.77 |
| Gas | 11,500 × £0.0797 = £916.55 | 365 × £0.2968 = £108.33 | £1,024.88 |
| Combined | Electricity plus gas | £1,935.65 | |
Your result will differ if your consumption, postcode, payment method, meter or quoted rates differ. Do not copy the combined figure into a budget simply because it appears in an example.
Why standing charges matter more for low use
Standing charges are fixed per day, so they make up a larger share of a low-use household’s cost. For example, using 1,000 kWh of electricity at 26.32p per kWh produces £263.20 of usage cost, while a 54.83p daily charge adds about £200.12 for the year before any other offer terms. An offer with a slightly lower unit rate but a materially higher standing charge may therefore be worse for a small or vacant property.
Put competing offers into one comparison sheet
Copy the figures from each quote into the same worksheet. Do not compare one supplier’s annual projection with another supplier’s monthly payment; rebuild both totals from rates and the same consumption.
| Item to record | Offer A | Offer B | Why it changes the decision |
|---|---|---|---|
| Electricity unit rate (p/kWh) | Enter quoted value | Enter quoted value | Drives cost in proportion to electricity use |
| Electricity standing charge (p/day) | Enter quoted value | Enter quoted value | Payable every day, including no-use days |
| Gas unit rate (p/kWh) | Enter quoted value | Enter quoted value | Drives cost in proportion to gas use |
| Gas standing charge (p/day) | Enter quoted value | Enter quoted value | Daily cost independent of consumption |
| Annual electricity and gas kWh | Use the same property figures | Use the same property figures | Keeps the comparison fair |
| Payment and meter eligibility | Record requirements | Record requirements | A rate may not be available on your meter or payment method |
| Contract term and end date | Record months | Record months | Determines how long a fixed price lasts |
| Exit fee and other conditions | Record amount and trigger | Record amount and trigger | Can change the cost of leaving or switching |
| Discounts, credits and payment terms | Record precisely | Record precisely | Headline savings may depend on conditions |
After calculating annual totals, compare the non-price terms. A lower estimate is not a saving if you cannot meet the required payment method or meter condition, or if a one-time credit is mistaken for a recurring reduction.
Decide whether a fixed tariff’s certainty is worth its commitment
When a fixed deal can fit
- You need predictable unit rates for a defined period and would rather avoid changes during that term.
- Your calculated annual cost is competitive after including standing charges and all stated conditions.
- You expect to remain at the property and can meet the contract’s payment and meter requirements.
- The potential cost of changing supplier before the end date is acceptable.
Check the break-even before paying to leave
If you are already on a fixed tariff, compare the remaining-term cost with the alternative, not just the new tariff’s headline rate. A simple test is:
Expected gross saving = estimated cost on the current deal minus estimated cost on the alternative.
Switching is financially beneficial only if that saving exceeds every applicable exit fee and other switching cost. For illustration, a £1,820 remaining-term cost versus £1,740 on a new offer gives an £80 gross difference. A £100 exit fee would make leaving £20 worse before any other conditions. The numbers are hypothetical; use the fee and remaining period in your contract.
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Ask the current supplier when an exit fee no longer applies and whether a move close to the contract end can be scheduled without paying it. Keep the answer in writing with your comparison.
Decide whether a variable tariff’s flexibility suits you
A variable tariff avoids a fixed-term commitment and can be easier to leave, but its rates can change. For a covered default tariff in Great Britain, the relevant Ofgem cap limits the per-kWh and daily charges for the stated period; it does not guarantee that your annual spending will stay below a particular amount. Your exposure is therefore the combination of rate changes and your own consumption.
Use a variable offer when its current annual calculation is competitive and you value the ability to move without a fixed-term commitment. Stress-test the budget by asking how a higher unit rate would affect your actual kWh, rather than relying on a generic annual bill. Conversely, a fixed offer may be preferable when avoiding rate uncertainty matters more than the possibility that a later variable rate could be lower.
Handle Economy 7 and other multi-rate electricity correctly
A multi-rate tariff cannot be assessed with one electricity unit rate. Record the separate peak and off-peak rates and the share of your annual kWh used in each period. Your calculation is:
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Electricity cost = peak kWh × peak rate + off-peak kWh × off-peak rate + 365 × electricity standing charge.
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Use the meter’s historical readings or the supplier’s time-of-use breakdown to estimate peak and off-peak kWh. If most usage occurs during the cheaper period, the lower off-peak rate may outweigh a higher peak rate. If your household uses electricity mainly during peak hours, a single-rate offer may compare better even when its advertised off-peak price looks attractive. Confirm that the replacement tariff supports your meter and that its peak/off-peak periods match how your household actually operates.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Follow a controlled switching process
- Gather your evidence. Have your postcode, current supplier and tariff name, electricity and gas unit rates, standing charges, meter type, payment method and annual kWh ready. Use actual readings where possible.
- Check the current contract. Identify whether you are fixed, the end date, and any early-exit fee or notice condition. Include the remaining term in your cost comparison.
- Collect live offers. Check the current supplier as well as other suppliers, either directly or through an energy price comparison website. Enter the same postcode, usage and payment method each time.
- Verify the quote’s building blocks. Open the tariff details and copy unit rates, standing charges, contract length, exit fee, discounts, taxes and payment requirements. Do not rely only on the projected annual figure.
- Normalize the calculations. Apply your annual electricity and gas kWh to every offer. For multi-rate electricity, split usage into the relevant periods. Add standing charges for 365 days.
- Adjust for switching costs and conditions. Add any applicable exit fee to the offer you would leave, and remove credits that do not recur when comparing ongoing costs. Reject an offer whose meter or payment requirements you cannot meet.
- Confirm the order. Recheck the final rates, start date, cooling-off or cancellation terms shown in the contract, and the opening meter-reading instructions. Keep the confirmation and readings so the first bill can be checked.
Ofgem’s switching guidance sets out the information to prepare and the routes for comparing offers: switch your home energy supplier.
Common comparison errors and how to correct them
| Error | Why it misleads | Correction |
|---|---|---|
| Using a typical-household illustration | The assumed consumption may be far from your home’s actual kWh | Use your own annual electricity and gas figures |
| Treating the price cap as a bill ceiling | The cap limits rates and standing charges, not total usage cost | Multiply the capped rates by your actual kWh and add daily charges |
| Comparing unit rates alone | A high standing charge can erase a small unit-rate advantage | Calculate both components for each fuel |
| Mixing payment methods | Direct Debit, prepayment and other methods can have different prices | Compare offers using the payment method you will actually use |
| Ignoring the meter type | A quoted rate may require a smart or multi-rate meter | Check eligibility before treating the quote as available |
| Forgetting an exit fee | A cheaper new rate may not recover the cost of leaving early | Put the contract fee into the remaining-term calculation |
| Counting a one-time credit as an annual saving | The first-year estimate can look lower than the ongoing cost | Show recurring cost and one-off credit separately |
| Comparing monthly payments | Payments reflect supplier forecasts and account balancing, not just rates | Compare annual kWh cost plus standing charges |
| Using a multi-rate tariff as if it had one rate | The result ignores when electricity is consumed | Split peak and off-peak kWh and calculate each separately |
| Applying a national average to a personal quote | Rates vary by region, fuel, payment method and meter | Use the postcode-specific offer and treat averages as context only |
A practical decision framework
Once the numbers are normalized, make the choice in this order:
- Eliminate unavailable offers. Remove tariffs that do not accept your meter, region or payment method.
- Calculate the annual cost. Use actual kWh, both standing charges and any applicable recurring terms.
- Price the commitment. For a fixed deal, record the term and exit fee; for a variable deal, recognize that rates can change.
- Check the usage fit. Recalculate multi-rate electricity using your peak/off-peak pattern and confirm that standing charges suit your consumption level.
- Choose your risk preference. Select fixed pricing when certainty for the term is worth the commitment; select variable pricing when flexibility and acceptance of rate movement matter more.
Keep a copy of the worksheet and the tariff’s full terms. Revisit the calculation when a fixed term approaches its end or when your annual usage changes materially, such as after moving home, installing electric heating or changing occupancy.
Final checklist before you submit a switch
- Postcode and region are correct.
- Electricity and gas annual kWh come from your property, not a typical-use assumption.
- Unit rates and standing charges are recorded for each fuel.
- Payment method and meter type match the quote.
- Peak and off-peak usage is separated where relevant.
- Fixed-term end date and any exit fee are included.
- Discounts, credits, taxes and payment conditions are understood.
- The annual calculation is based on 365 days of standing charges.
- You have saved the tariff details, confirmation and opening meter readings.
The sound comparison is not fixed versus variable in the abstract. It is your annual cost on each available tariff, plus the value you place on rate certainty or flexibility, after every charge and contract condition has been made visible.
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