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How to Compare Fixed and Variable Energy Tariffs When Prices Are Volatile

A fair tariff comparison starts with your own annual energy use, then accounts for unit rates, standing charges, exit fees and how much certainty you want.
From TheFinanceBase Team5 min to read
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In Great Britain, compare a fixed energy tariff with your current standard variable tariff (SVT) by applying each option’s unit rates and standing charges to your own annual electricity and gas use, then checking contract length, exit fees and eligibility. A fixed tariff locks agreed rates for a stated term; an SVT’s rates can change and are covered by Ofgem’s price cap. Neither option is guaranteed to cost less over time.

What fixed and variable energy tariffs mean

Fixed tariffs lock rates, not bills

A fixed tariff holds its agreed unit rates and daily standing charges for the contract period. Your bill can still rise or fall with the amount of energy you use. A fixed tariff is not protected by future changes to the SVT price cap while its contract rates apply.

Standard variable tariffs can change

An SVT has rates that can change. In Great Britain, Ofgem’s price cap limits covered unit rates and standing charges, and is reviewed every three months. The cap does not set a maximum total bill: using more energy can mean paying more. A fixed offer is governed by its contract rather than the cap.

How to compare tariffs using your own usage

  1. Find your annual usage. Get the last 12 months of electricity and gas consumption in kilowatt-hours (kWh) from your bills or supplier account. If you cannot find actual usage, use an estimate and label it as one.
  2. Record the full terms of each offer. Note electricity and gas unit rates, daily standing charges, payment method, meter requirements, contract end date and any exit fee. Check whether rates stay fixed for the whole term and what happens when it ends.
  3. Estimate annual costs on the same basis. For each fuel, calculate: (annual kWh × unit rate) + (365 × daily standing charge). Add fees or discounts only where the offer terms make their application clear. If you buy both fuels under one offer, add the two fuel estimates.
  4. Compare with your actual current SVT. Use the rates that apply to your region, payment method and meter, rather than a generic headline. Ofgem publishes region-specific price-cap tables: check whether the price cap affects you.
  5. Weigh price against flexibility. Assess the estimated cost separately from how much you value stable rates. An SVT can rise or fall as its rates change; a fixed deal can become less attractive if market rates fall, and some fixed contracts charge an exit fee.
  6. Check what comes next. Read the fixed tariff’s end-of-term and rollover terms, along with the current switching conditions and exit fee. Do not assume that a fixed contract will automatically end on terms you prefer.

A useful decision rule is to compare the fixed offer after standing charges and any applicable fees, then decide whether its rate certainty is worth the contract duration and exit terms. There is no reliable universal break-even answer without your usage and a live offer.

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Should you fix your energy tariff or stay on the price cap?

Choose based on the specific offers available to you, not on a forecast that prices will move in one direction. A fixed tariff may suit someone who values predictable rates and accepts the contract terms. An SVT may suit someone who wants to avoid a fixed-term commitment and accepts that rates can change. The cap limits covered rates and standing charges during each cap period; it is not an annual promise about future costs.

For context—not as a current deal comparison—Ofgem’s January 2026 State of the Market report said the cheapest tariff was approximately £265 below the cap as of October 2025, and around one-third of customers were on fixed-term tariffs by July 2025. Those are dated observations, not today’s price gap or a guarantee that a cheaper fixed offer is available.

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Great Britain price-cap figures for 1 October–31 December 2026

Ofgem’s average Direct Debit figures for England, Scotland and Wales in this quarter are shown below. The typical annual dual-fuel amount is an illustration based on average rates and standing charges, not a ceiling on an individual household’s bill.

Measure Ofgem figure What it represents
Typical annual dual-fuel bill £1,723 Average-rate Direct Debit illustration for 1 October–31 December 2026; not a limit on total household spending.
Electricity unit rate 26.32p/kWh Average Direct Debit rate for the stated quarter.
Electricity standing charge 54.83p/day Average Direct Debit charge for the stated quarter.
Gas unit rate 7.97p/kWh Average Direct Debit rate for the stated quarter.
Gas standing charge 29.68p/day Average Direct Debit charge for the stated quarter.

Ofgem said the cap rose 4% from the preceding period for a typical dual-fuel Direct Debit household. The figures above are averages; actual cap rates vary by region, fuel, payment method and meter type. Ofgem’s rate table provides regional figures: view the price-cap rates and regional information.

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VAT treatment also changed: Ofgem’s rate table says electricity has no VAT from 1 October 2026 through 31 March 2027, while gas includes 5% VAT. Ofgem warns that costs cannot be compared directly with earlier periods because of this change. These quarter-specific rates are not a forecast of later cap periods.

What to check before signing a fixed deal

  • Exit fees: They vary by contract; check the actual terms rather than assuming a fee applies or does not apply. Ofgem’s consumer guidance discusses customers’ understanding of exit fees, but a survey finding cannot establish the terms of your offer: Ofgem consumer research on energy bills and tariffs.
  • End-of-term terms: Confirm the tariff’s end date and what rate or tariff would apply if you do not switch or renew.
  • Eligibility: Check that your payment method, meter and location qualify for the quoted tariff.
  • Usage assumptions: Treat a supplier’s headline annual cost as a standardized illustration unless it is calculated from your own kWh.
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Why the price cap does not tell you which tariff will be cheaper

The cap is a limit on covered unit rates and standing charges for SVTs, not a cap on total consumption costs. A fixed deal sits outside that future cap protection during its term, but its contract rates are agreed in advance. Since the cap is reset periodically and fixed offers vary, today’s comparison cannot establish which will cost less over a future period.

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Ofgem’s consumer guidance explains the cap and standing charges, including that “It does not limit the cost of your total bill.” Read the explanation here: Ofgem’s explanation of the energy price cap and standing charges.

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