What is a fixed price energy tariff?
A fixed price energy tariff is when the cost of your energy remains the same for the length of your tariff agreement – usually the fixed pricing lasts for between one and two years.
Be aware though that it’s the cost of energy per unit that stays the same, so this doesn’t necessarily mean your bills will stay the same each month. The more energy you use each month, the more you will pay.
The main alternative to a fixed price energy tariff is a variable rate tariff – these are usually called Standard Variable Rate (SVR) deals or default tariffs. Here, the price per unit of gas or electricity can rise and fall and the tariff itself is open-ended. So if there is a surge in global energy prices, your energy company can increase your bill – or cut it to reflect a reduction in global prices.
Are fixed price energy tariffs cheaper?
When you get an energy price comparison, both fixed and variable tariffs will quote you an annual cost based on the details you enter about your home and energy usage.
There is a lot of competition for your business, and energy suppliers try to attract customers with attractive fixed price deals. At the moment, switching from a variable rate deal to a fixed rate tariff could save you at least £280*.
*51% of customers that applied to switch via MoneySuperMarket could save at least £289.40, March 2020.
But the actual amount you pay per month will also depend on:
- How much energy you use: remember, even with a fixed price tariff, your bill reflects your energy usage, so the more energy you use, the more you’ll pay
- Your home’s energy efficiency: homes that have poor insulation and old, inefficient appliances can also see higher energy bills. Our energy saving tips will help you cut your energy bills.
- How you pay: some providers offer discounts if you pay by monthly direct debit and have an online account rather than paying quarterly with cash or cheque
Are there any other benefits to fixed price energy tariffs?
Aside from potentially benefiting from cheaper bills, a fixed price tariff also offers the following advantages:
- More predictable billing: as the cost per unit of energy stays the same for the whole term, you won’t have to worry about fluctuations in price if your energy consumption stays roughly the same. This can make it easier to manage your budget
- Protection from price hikes: you’ll also be protected for the duration of your contract if the cost of energy suddenly goes up
- Are there any disadvantages in fixed price energy tariffs? Locked-in pricing in a falling market: the flipside of being protected from price hikes is that you won’t benefit if energy costs come down on global markets, as your unit price won’t change.
- Potential exit fees: you might also be faced with exit fees if you’re on a fixed tariff and you decide to switch before the end of your contract (not all fixed tariffs have these fees, but those that do charge £10 - £30 per fuel). Note, however, that exit fees will not be charged if you are within 49 days of your tariff coming to an end. This is to allow you time to find and switch to a new deal.
How does the energy price cap affect fixed price tariffs?
The energy market regulator, Ofgem, imposes energy price caps to stop energy suppliers from over-charging their customers. But these caps apply to variable rate, default and prepayment meter tariffs, not to fixed price deals.
Fixed rate tariffs are generally priced at less than the level of the cap, so they already represent better value.
How can I switch to a fixed price energy tariff?
The process of switching energy suppliers is straightforward thanks to the Energy Switch Guarantee, which covers over 90% of suppliers. It’s handled entirely by the company you’re moving to, and you’re guaranteed a hassle-free switch within 21 days.
You’ll stay on your old tariff until the process is complete, and you won’t be without gas or electricity at any point. You’ll continue to get the same fuel through the same pipes and wires after you’ve switched, so there’ll be no need for work inside or outside your property.
To start the switching process, you should run a price comparison with MoneySuperMarket. You’ll see tariffs from over 50 suppliers, all competing for your business. Select the one that’s right for you, enter a few more details, and the switching process will begin. If you change your mind you have a 14-day cooling-off period in which to stop the process at no cost to yourself.
Comparing fixed price energy tariffs
Finding a better deal on energy tariffs is easier when you compare with MoneySuperMarket. All you need to do is tell us a little about yourself, your home, and your approximate energy usage – the more we know about your energy usage the more accurate your quote will be.
Then we’ll show you a list of quotes tailored to your energy needs, so you can compare deals by the monthly and yearly cost, as well as the type of rate you’ll be charged at and the yearly savings you could make by switching.
When you’ve chosen your new supplier and tariff, just click through to finalise your purchase – thanks to the Energy Switch Guarantee you’ll be with your new supplier within 21 days.
Switch and save with Energy Monitor
Switching your energy supplier is quicker and easier with MoneySuperMarket’s Energy Monitor. We’ll let you know as soon as there’s a cheaper tariff available for you, whether it's fixed or variable, so you can effortlessly switch and save money on your energy bill.