Fixed vs Variable Energy Tariff UK 2026 | Should You Fix or Stay Variable?

Fixed vs Variable Energy Tariff UK

Should you fix your energy tariff or stay on the price cap variable rate? Compare costs, pros and cons, and use our decision calculator to find the best option for 2026.

💰 January 2026: Fixed Deals £181-208 Cheaper Than Price Cap

Best fixed tariffs now at £1,550-1,577/year vs £1,758 price cap variable. Locks in savings for 12-18 months but has £50/fuel exit fees. April 2026 expected to bring £130-150 price cap reduction when levies removed. Decision: fix now for certainty or wait for April drop then reassess.

£1,758
Variable (Price Cap Jan-Mar 2026)
£1,550
Best Fixed Tariff (16m)
£208
Annual Saving (Fixed vs Variable)
£100
Typical Exit Fee (Dual Fuel)

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Fixed vs Variable Tariff Comparison (January 2026)

Feature Variable (Price Cap) Fixed 12m Fixed 16-18m
Typical Annual Cost £1,758 £1,577-£1,590 £1,550-£1,552
Annual Saving vs Cap - £168-£181 £206-£208
Contract Length No fixed term 12 months 16-18 months
Exit Fee (Dual Fuel) None £100 (£50/fuel) £100 (£50/fuel)
Price Changes Quarterly (follows Ofgem cap) Fixed for 12 months Fixed for 16-18 months
Benefit From Price Drops ✅ Yes - immediate ❌ No - locked in ❌ No - locked in
Protection From Rises ⚠️ Price cap protects from excessive rises ✅ Yes - locked in ✅ Yes - locked in
Flexibility ✅ Can switch anytime ⚠️ Exit fee to switch early ⚠️ Exit fee to switch early
Best Example Suppliers All suppliers (Next Flex, OVO Variable, etc.) Octopus 12M Fixed, EDF GoFix E.ON Next Fixed 16m, British Gas Fixed 18m

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Current Situation (January 2026): Fixed deals are £168-£208/year cheaper than variable price cap. However, April 2026 is expected to bring a £130-150 reduction to the variable cap when environmental levies are removed. This means if you fix now, you'll save £208/year vs current cap but miss the April drop. If you wait, you benefit from the drop first then can reassess fixed deals.

Fixed Tariffs Explained

Fixed tariffs lock in your unit rates (price per kWh) and standing charges (daily fee) for a set contract period, typically 12-24 months.

How Fixed Tariffs Work

  • Fixed unit rates: Electricity and gas prices stay the same for entire contract (e.g., 27p/kWh electric, 6.5p/kWh gas)
  • Fixed standing charges: Daily connection fee doesn't change (e.g., 55p/day electric, 32p/day gas)
  • Usage varies: Your bill still fluctuates based on how much energy you use, but the price per unit is locked
  • Contract terms: Usually 12, 16, 18, or 24 months with exit fees if you leave early
  • End of contract: You're automatically moved to supplier's variable tariff unless you renew or switch

Current Best Fixed Deals (January 2026)

  • E.ON Next Fixed 16m: £1,550/year, saves £208 vs cap, 16 months, £50/fuel exit fee
  • British Gas Fixed 18m: £1,552/year, saves £206 vs cap, 18 months, £50/fuel exit fee
  • Octopus 12M Fixed: £1,577/year, saves £181 vs cap, 12 months, £50/fuel exit fee
  • EDF GoFix 12m: £1,590/year, saves £168 vs cap, 12 months, £50/fuel exit fee

✅ Fixed Tariff Pros

  • Price certainty: Know exact unit rates for 12-24 months - easier budgeting
  • Protection from rises: If wholesale prices spike, you're protected
  • Currently cheaper: Best fixed deals £168-£208/year below price cap
  • Peace of mind: No quarterly price anxiety when cap changes announced
  • Savings guarantee: Lock in savings vs variable for entire contract

❌ Fixed Tariff Cons

  • Exit fees: £50/fuel (£100 dual fuel) if you switch before end
  • Miss price drops: Won't benefit from April 2026 £130-150 reduction
  • Locked in: Can't take advantage of better deals during contract
  • End-of-contract trap: Rolled onto expensive variable if you forget to renew
  • Moving house: Exit fees apply if you move and can't transfer tariff

Variable Tariffs Explained

Variable tariffs change periodically based on market conditions, with the most common being the standard variable tariff (SVT) which follows Ofgem's price cap.

How Variable Tariffs Work

  • Price cap linked: Most variable tariffs follow Ofgem's quarterly price cap (Jan-Mar, Apr-Jun, Jul-Sep, Oct-Dec)
  • Rates change: Unit rates and standing charges adjust every 3 months based on wholesale market
  • Default option: If you don't choose a tariff, you're on your supplier's SVT
  • No exit fees: Free to switch anytime to better deal
  • No contract: Rolling monthly basis with no fixed end date

Types of Variable Tariffs

  • Standard Variable (SVT): Default tariff, tracks price cap exactly (e.g., E.ON Next Flex at £1,758/year)
  • Tracker tariffs: Follow wholesale prices more closely, can be volatile but sometimes cheaper
  • Cap-discount tariffs: Guaranteed to stay below price cap by fixed amount (rare but exist)
  • Green variable: 100% renewable electricity, usually tracks cap with slight premium

✅ Variable Tariff Pros

  • No exit fees: Switch anytime for free if better deal appears
  • Benefit from drops: April 2026 expected £130-150 reduction passed on immediately
  • Flexibility: No commitment - perfect if you might move house
  • Price cap protection: Ofgem cap prevents excessive price rises
  • Simple default: No need to choose tariff or monitor end dates

❌ Variable Tariff Cons

  • Currently more expensive: £1,758/year vs £1,550-1,577 fixed deals
  • Price uncertainty: Rates change quarterly - harder to budget
  • Exposed to rises: If wholesale prices spike, your bills go up (within cap)
  • Quarterly anxiety: Every 3 months waiting to see if cap rises or falls
  • No savings guarantee: Could end up paying more over 12-24 months vs fixing

🎯 When To Fix vs When To Stay Variable

Fix Your Energy If:

  • Fixed deal at least £150-200/year cheaper: Current best fixed £1,550 vs £1,758 cap = £208 saving worth it
  • You prioritize certainty: Hate price changes and want predictable bills for budgeting
  • Staying 12+ months: Exit fees won't apply and you'll benefit from full contract savings
  • Worried about price rises: Concerned about geopolitical risks or supply issues pushing prices up
  • Can afford exit fees: £100 dual fuel exit fee manageable if you need to switch
  • Not expecting major drops: Don't think April 2026 reduction will make variable significantly better

Stay Variable If:

  • Fixed only slightly cheaper: If saving less than £100-150/year, not worth losing flexibility
  • Expect prices to fall: April 2026 £130-150 drop means variable could beat current fixed deals
  • Might move within year: Exit fees £100 would wipe out savings if you switch early
  • Value flexibility: Want to switch freely if amazing deal appears
  • On benefits/support schemes: Some grants/support easier to access on variable
  • Low energy user: Smaller bills mean fixed vs variable difference less significant

January 2026 Specific Advice:

The Timing Dilemma: Fixed deals now save £208/year vs current cap BUT April 2026 brings £130-150 cap reduction. If you fix now at £1,550, you save £208 vs current £1,758 cap. If you wait, cap drops to ~£1,610 in April, then fixed deals might be around £1,450-1,500 (saving £110-160 vs new lower cap).

Two Strategies:

  • Strategy 1 - Fix Now: Lock in £208/year saving immediately for 16-18 months. Miss April drop but guaranteed savings and certainty.
  • Strategy 2 - Wait Until April: Benefit from £130-150 reduction first (2 months saving Feb-March), then reassess fixed deals in April when they'll likely be cheaper. Risk: if everyone waits, April fixed deals might not be much cheaper than current ones.

Verdict: If you prioritize certainty and £208/year saving appeals, fix now with E.ON Next Fixed 16m (£1,550). If you're flexible and want to capture April drop first, stay variable until April then look for fixed deals around £1,450-1,500 that might emerge.

Real-Life Scenarios: Fixed vs Variable

Scenario 1: Risk-Averse Family on Tight Budget

Situation: 3-bed semi, 2 adults, 2 children, £2,800/year typical energy bills, tight monthly budget

Current tariff: Variable SVT at £1,758/year (typical usage)

Options:

  • Stay variable: £1,758 now, £1,610 from April (£1,660 average over next 12 months)
  • Fix 16m at £1,550: Guaranteed £208/year saving vs current cap, £110 saving vs April onwards

Recommendation: FIX - Price certainty crucial for budgeting. £208/year (£17/month) guaranteed saving helps tight budget. Exit fee £100 manageable if staying 6+ months. Peace of mind worth it.

Scenario 2: Flexible Professional Renting

Situation: 1-bed flat, single person, £1,100/year bills, rents property, may relocate for work in next 12 months

Current tariff: Variable SVT at £1,758/year (lower bills due to small usage)

Options:

  • Stay variable: No exit fees, can switch anytime, benefits from April £130-150 drop
  • Fix 12m: Saves ~£10-15/month but £100 exit fee if moves house early

Recommendation: STAY VARIABLE - Low bills mean fixed vs variable difference is small (maybe £10-15/month). Relocation risk makes exit fees deal-breaker. Flexibility more valuable than modest saving.

Scenario 3: Homeowner Planning Ahead

Situation: 4-bed detached, family of 4, £3,200/year bills, own home, settled for 5+ years

Current tariff: Variable SVT at £1,758/year (high usage property)

Options:

  • Stay variable: Wait for April drop, then reassess - might save extra £50-100 by timing better
  • Fix 18m at £1,552: Lock in £206/year saving now for 18 months

Recommendation: FIX - High bills mean £206/year saving is significant. Settled for years so no relocation risk. 18-month contract covers next winter. Exit fee £100 irrelevant with long-term stay. Certainty and savings both achieved.

📊 Fixed vs Variable Summary - January 2026

Current Price Cap Variable: £1,758/year (Jan-Mar 2026), increased just 0.2% from October 2025. April 2026 expected to fall £130-150 when levies removed.

Current Best Fixed Deals: £1,550-1,577/year for 12-18 month contracts, saving £168-208/year vs current cap. Exit fees £50/fuel (£100 dual fuel).

Fixed Tariff Advantages: Price certainty for 1-2 years, protection from wholesale price spikes, guaranteed savings vs current cap, easier budgeting, peace of mind.

Variable Tariff Advantages: No exit fees, benefit from April 2026 £130-150 reduction immediately, flexibility to switch anytime, price cap protection from excessive rises, no contract commitment.

Decision Framework: Fix if you want certainty, saving £150+ annually, staying 12+ months, and worried about price rises. Stay variable if you value flexibility, expect significant price falls, might move within year, or saving less than £100/year.

January 2026 Timing: Fixed deals currently £208/year cheaper BUT April brings £130-150 cap reduction. Strategy 1: Fix now for guaranteed saving and certainty. Strategy 2: Wait until April to benefit from drop first, then reassess fixed deals that might be cheaper.

Exit Fee Payback: £100 exit fee vs £208/year fixed saving = 6-month payback. Worth fixing if staying 6+ months. Not worth if might switch in under 6 months.