Fixed Tariff or Variable Tariff – what’s really the cheapest option?

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When searching the market for the cheapest energy deals, it’s easy to be attracted to cheap, variable tariff options. While a variable tariff rate may be the cheapest at the moment - the key phrase here is 'at the moment'. Variable tariffs - as their name suggests - are subject to fluctuate in price depdending on the market's base energy prices. When looking for the best deal, you may want to protect your home from this volatile market both in the present and in the future. Fixed tariffs also have their pros and cons  - for example, if you sign up to a 3 year fixed tariff, you will pay the same rate for your energy for the duration, regardless of whether energy prices increase or decrease.

With this in mind, let’s look at the two types of tariff and see which can really help to save you money in the future.   

Variable Tariff
 A variable tariff usually works by tempting customers in with a low price, which is then subject to change at any time.


  • If the prices on the market fall so will your energy prices. 
  • You have the freedom to switch to a different tariff or supplier at any time.


  • If prices rise – so does your energy bill.
  • Variable deals often start off with a low price, but there is no guarantee how long they will stay that way.

With no way to predict the energy market your bills could jump from the cheapest on the market to the most expensive without warning. You have no way to predict if your cheap energy will last a few months or just a few weeks – and there can sometimes be a cancellation fee if you want to switch. Variable tariff plans are quite competitive so make sure to compare energy rates to ensure you get the best deal for you. Currently, the cheapest annual variable rate energy tariff is GB Premium is £870*.

Fixed Rate Tariff

Having a fixed rate tariffs means that you will pay the same unit rate for your energy for the duration of the contract. 


  • No matter how unpredictabe the energy market may be – you will not be affected by rising energy prices.
  • The choice of a wide variety of tariffs - nearly all energy suppliers offer a fixed rates.


  • Fixed price plans are typically more expensive than variable ones.
  • If energy prices drop, you will still have to pay the same amount.
  • Exit fees are almost always applicable if you want to terminate before the contract end date (see our our cancellation fee checker for more info).

If you don’t like to gamble with your finances a fixed tariff may be for you. This tariff will protect you from fluctuating energy bills. The cheapest fixed offering on the market is currently available from First: Utility and offers fixed rates until 31st July 2016 at £913 a year* – only £3.58 a month more than the current cheapest variable rate*. Click to quickly compare fixed rate plans and find the best option for you.


*Accurate at time of writing. Subject to change.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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