The choice between a fixed and variable energy tariff has never been more consequential. Get it right and you could save £150+ over the next year. Get it wrong and you might be locked into a deal that costs you more as prices shift. Here is a clear breakdown of how each works and what to do right now.
Variable Tariffs: What You Are On by Default
Most UK households sit on a standard variable tariff (SVT), which tracks the Ofgem price cap. In Q2 2026, the cap stands at 24.5p/kWh for electricity and 6.24p/kWh for gas, equating to around £1,849/year for a typical household. The cap changes quarterly — April, July, October, January — meaning your bills can rise or fall without warning. No exit fees apply, so you can switch anytime.
Fixed Tariffs: Lock In and Forget
A fixed tariff sets your unit rate and standing charge for a defined period — typically 12 or 24 months. Regardless of what happens to the Ofgem cap, your rate stays the same. In April 2026, the best 1-year fixed deals sit 3-6% below the current cap rate from suppliers including Octopus Energy, E.ON Next, and EDF. That translates to roughly £55-£110 in annual savings vs the current cap.
The Key Question: Which Way Are Prices Moving?
This is where it gets interesting. Energy analysts and Ofgem forecasts for Q3 2026 (July) suggest the cap could rise slightly — between 3-5% — driven by global gas market volatility. If that happens, a fixed deal locked in now at below-cap rates looks very attractive. If prices fall instead, variable wins. The consensus in April 2026 leans toward fixing for 12 months if you can find a deal 5% or more below the current cap.
Exit Fees: The Hidden Catch
Most fixed tariffs charge exit fees of £25-£50 per fuel if you leave before the end date. Combined, that is up to £100. Factor this into your calculation — if you fix and then want to switch to something cheaper mid-contract, it will cost you to get out. If flexibility matters, stay variable.
Which to Choose Right Now
- Fix if: You find a deal 5%+ below the current cap, you want budget certainty, and you plan to stay with that supplier for 12 months
- Stay variable if: You want flexibility, you think prices will fall, or the fixed deals available are close to or above the cap rate
Either way, compare deals every quarter when the cap changes. Set a reminder — it takes 10 minutes and could save you hundreds. Ready to cut your energy costs? Compare deals today.
