Fixed or variable energy tariffs. Which is right for you?

Confused about what’s right for your household? Navigating the energy market can be a bit puzzling, especially with all the different types of energy tariff now available. However, choosing the right tariff for you is an important part of your household budget. That’s why we’re here to help you make the right decision.

There two main types of energy tariffs: fixed tariffs and variable tariffs.

Understanding fixed energy tariffs.

This means the prices are fixed for the length of your tariff – so unit rates and standing charges will stay the same until your tariff ends, but the amount you pay will change depending on how much energy you use. Your unit rate is the amount you pay for every unit of energy you use, which is measured in kilowatt hours (kWh). Your standing charge is a daily rate which pays for the access to your energy. This covers your energy’s journey from the generators across all the wires and right into your home.

Fixed rate tariff advantages.

You don't need to worry about any price hikes your energy supplier implements. For the duration of your contract the amount you pay never goes up or down. Budgeting is made easier as you know exactly how much you pay for your energy. Though prices are often higher in the short term, you could make savings over a number of years if wholesale energy prices rise.

Fixed rate tariff disadvantages.

If there are any decreases in gas and electricity prices, you won’t enjoy a reduction on your bill. There may be exit fees if you want to change your energy supplier or switch to a cheaper tariff.

Understanding variable energy (flexible) tariffs.

Here at E.ON Next our standard variable tariff is referred to as a flexible tariff - Next Flex. This tariff has variable prices which means that the amount you pay for your energy (i.e. your unit rates and standing charge) will go up and down with the Ofgem price cap, depending on wholesale energy prices.

Every energy supplier will have their own standard variable tariff, as it's the default tariff that you will move on to if you don't renew your energy deal.

However, there are other types of variable rate tariff available as well. For example our Next Pledge tracker tariff, that doesn't just change with the price cap - it guarantees to beat it. Tracker tariffs still have variable energy prices, but they are often for a fixed time period. Our Next Pledge tariff is a one year contract for example.

Variable (flexible) rate tariff advantages.

You can switch at any time. This is a flexible approach. The cost of wholesale energy can go down as well as up, meaning that you could pay less for the same amount of energy if wholesale costs drop.

Variable (flexible) rate tariff disadvantages.

Your energy price will change with the price cap, so increases in wholesale prices could result in your bill going up and stretching your budget.

Is it better to get fixed or variable electricity?

The right choice for you very much depends on the needs of your household. If you’re after a low-maintenance electricity tariff that let's you budget ahead with confidence, then a fixed tariff might be your best bet.

However, if you want to make sure you’re always getting the best deal, and the lowest prices on the market, then you may be better off with a variable (flexible) rate deal. Just remember that your electricity prices can go up as well as down, so it's not guaranteed to save you money.

Whatever you choose, we’re on hand to help you. Get your quote today!

Fixed tariffs vs variable tariffs.

Confused about what type of energy tariff to choose? Let's break down the pros and cons of both.

Should I get variable or fixed gas?

If your home uses mains gas (normally for your heating or cooking appliances) you will also need a gas tariff. The simplest option is to get a combined gas and electric tariff, called a dual fuel tariff. This means you'll be with one supplier for both fuels and get one combined energy bill each month - making it easy to manage your energy in one place.

With a dual fuel tariff you will need to decide if you want fixed or variable prices for both your electricity and your gas, as they will be under the same contract.

However, some newer tariff options may have different pricing models for each fuel, even within the same dual fuel tariff - so make sure you read the full details. A common example would be time of use tariffs, like our EV tariff Next Drive. The electricity prices are different at peak and off-peak times, but the gas prices remain at the same fixed price throughout your contract.

It is possible to get a gas only tariff, but they aren't as common, so you may need to shop around.

Should I fix my energy tariff now until 2026?

Unfortunately, we can't tell the future - if we could we'd predict lottery numbers instead of energy prices!

To help make a decision on whether a fixed or variable tariff is right for you, check out our latest price cap predictions. Just be aware that these predictions aren't set in stone and can change due to a variety of factors.

If security is your priority try to find a fixed tariff deal that suits your budget, so you can have peace of mind that your energy prices won't change for the duration of your tariff.

Tips for choosing energy tariffs.

Check your meter type, as this could limit which tariffs are available to you. To maximise your tariff options consider upgrading to a smart meter.

Find your total energy use for the last year on your energy account or a recent bill. This will give you more accurate energy quotes that are easy to compare.

Choose how you would like to pay your energy bills, as your payment method can affect your energy quote. Paying by Direct Debit is generally the cheapest option.

If you aren't sure whether to fix your tariff, you can check out the latest price cap predictions for a quick snapshot of the current energy market.

Switching energy providers to enjoy good savings on tariffs.

Once you've chosen your new fixed or variable tariff, switching to us is simple.

1. Sign-up to your new tariff - you can do this through our quote tool, via your follow-up quote email, or over the phone.

2. Send us your opening meter readings. We'll send you a handy reminder when you need to submit them.

And that's it! No need to contact your old supplier, your new supplier will send them everything they need to close your account.

Find out more about switching energy supplier.

Also read our energy guides to understand on all things energy.

Understand about the energy price cap information.

The energy price cap is the maximum price per unit that energy companies can charge you for your gas and electricity on a standard variable tariff. It also sets the maximum cost of the standing charges.

The energy regulator, Ofgem, sets the price cap and reviews it every three months. It fluctuates with changes in wholesale energy costs, and can rise or fall depending on factors that affect the UK's energy supply chain.

Changes to the price cap will affect variable energy tariffs, so it's a good idea to keep an eye out for price cap announcements.

Learn more about the price cap.