Fixed and Standard Variable Tariffs Explained

A fixed tariff holds the unit price of gas and electricity for an agreed period, usually 12 months, and a standard variable tariff does not: the rate moves with the market but sits underneath Ofgem's energy price cap. That single difference decides most of what follows, because the cap is a ceiling on the default rate rather than a deal a household chooses¹.

The cap itself is set every quarter and covers standard variable and default tariffs. Ofgem introduced it on 1 January 2019 under the Domestic Gas and Electricity (Tariff Cap) Act 2018, and moved from setting it every six months to every quarter in summer 2022 in response to high and volatile wholesale prices³. The wholesale index inside it is calculated on a 12 month forward view of gas and electricity prices, which is why a cap level announced today reflects expectations about the year ahead rather than today's spot market⁴.

For a household, the practical question is not which label sounds safer but what each one fixes, what it leaves exposed, and what it costs to leave. A fixed tariff fixes the unit rate and the daily standing charge, not the bill. A standard variable tariff fixes nothing but gives the right to leave at any time without a fee. The arithmetic between them turns on the gap at the moment of signing, the exit fee if circumstances change, and what happens on the day the fixed term ends.

Fixed or standard variable: the difference in one line

A fixed tariff sets the price per unit of gas or electricity for an agreed period; a standard variable tariff does not, and instead moves up or down with the cost of buying energy on the open market⁷. Ofgem's own consumer research tested households against three options: a 12 month fixed term, a 24 month fixed term, and standard variable⁸. Those are the shapes the market actually offers.

The legal definition matters because it decides who is protected. The Domestic Gas and Electricity (Tariff Cap) Act 2018 defines a standard variable rate as a rate or amount charged for the supply of gas or electricity under the contract that is not fixed for a period specified in the contract⁹. Anything not fixed for a stated period is, in effect, variable, and variable domestic tariffs are the ones the cap exists to cover.

Fixed terms are usually shorter than households assume. Independent guidance puts a typical fixed rate tariff at between one and three years, with 12 months the common case and two or three year deals available from some suppliers². A separate guide states fixed tariffs usually last for a year¹⁰. The range across sources reflects the market rather than a disagreement: one year is the norm, longer terms exist, and the term is stated on the contract.

The distinction has a second edge that is easy to miss. A standard variable tariff is usually the supplier's default tariff, the one a household lands on at the end of any fixed rate tariff, and it is usually the most expensive tariff that supplier offers². It is not a product anyone selects so much as the position a household occupies when it has not selected anything.

What a fixed tariff actually fixes, and what it does not

The name oversells it. A fixed rate tariff fixes your unit price, not your energy bill². The amount charged is set by three things: how much energy you use, the unit cost, and the daily fee¹⁰. Two of those are held for the term. The first is entirely within the household's control and is the reason a fixed tariff still produces a different total every month.

What is held is the unit cost of energy and the daily standing charge¹². What is not held is consumption. A cold February, a fortnight of working from home, or a change in the number of people in the property all move the total while the rates stay exactly where they were. A household comparing a fixed deal with the cap should compare rates and standing charges, not last year's total bill.

Suppliers cannot raise the price during the fixed period, with narrow exceptions. Independent guidance states that a supplier cannot increase the price you pay unless the government has raised VAT, and a second source adds that the exception also covers a staggered tariff¹⁰. The VAT point is not theoretical: VAT on electricity bills is reduced from 5% to 0% from 1 October 2026 until 31 March 2027, applying to all tariffs including fixed deals, so a fixed tariff signed before that date will show a lower electricity bill for reasons that have nothing to do with the fix itself.

The protection runs for the length of the term. Independent guidance describes a fixed tariff as worth locking in to protect against higher prices for at least 12 months¹⁴. That is the whole of the offer: a known rate for a known period, and no protection at all on the day the period ends.

A standard variable tariff moves with the market, but sits under the price cap

A standard variable tariff is where the price you pay can go up or down based on things like the cost of buying energy on the open market⁷. It is tied to Ofgem's energy price cap, so when the cap moves, the tariff moves with it². The rate fluctuates depending on the price of energy, and the household has no contract term to serve¹⁵.

The trade is straightforward and worth stating plainly. Standard variable tariffs are usually the most expensive types of tariff on the market, often hundreds of pounds more expensive per year than a fixed tariff¹¹. A separate guide reaches the same conclusion from the other direction, describing the standard variable rate as the supplier's default and typically higher than fixed rates¹⁵. The cap does not make the tariff cheap; it makes it capped.

What the household gets in return is freedom of exit. Standard variable tariff customers can switch at any time without incurring any fees, because they are not tied into a contract and pay no exit fees if they change supplier¹⁶. That is a real benefit, and one that consumers routinely fail to recognise: Ofgem's research found that only half of consumers correctly identify that switching deals without being charged an exit fee is a benefit of a variable tariff⁸.

The cap's coverage is broad. Ofgem states that people on a standard variable tariff are protected by the energy price cap, and the same wording appears across its billing guidance¹. The cap protects existing and future domestic customers on standard variable and default tariffs, which Ofgem refers to collectively as default tariffs¹⁸. It is one cap across the market, set to cover a notional efficient supplier, rather than a bespoke cap for each company¹⁹.

The price cap: how it works and what it limits

The cap is a limit on the unit rate and standing charge a supplier can charge a default tariff customer, not a limit on the bill. Ofgem introduced the default tariff cap on 1 January 2019 following the Domestic Gas and Electricity (Tariff Cap) Act 2018²⁰. It has been set every quarter since summer 2022, when Ofgem moved from a six monthly cycle in response to high and volatile wholesale prices⁴.

The wholesale element is built on a 12 month forward view of gas and electricity prices⁴. That forward view is why cap levels can rise while current wholesale prices are falling, and why a household watching the news can find the cap moving in a direction that seems to contradict the market. The cap also carries allowances for operating costs and for debt related costs, and Ofgem has consulted repeatedly on how those allowances are set⁶. Any adjustment to those elements is a fixed amount rather than a float and true-up²¹.

The scale of the protection is large. Ofgem's consultation on operating cost allowances states the cap currently protects 29 million customers on standard variable and default tariffs⁶. Earlier figures show how the protected population has been counted over time: 23 million households in 2022, around 11 million in 2019, and 11 million in 2018 when the legislation was still passing through Parliament²². The differences reflect the market at each date rather than a contradiction.

What a fixed deal costs against the cap: the current gap

The gap between a fixed deal and the cap is not fixed either. The average fixed tariff offered in May 2026 was above the price cap, reflecting supplier expectations that the cap would increase in the future²⁶. That is the normal shape of the market: fixed deals priced above the current cap when suppliers expect the cap to rise, and below it when they expect it to fall.

The cap itself rose on 1 October 2026. Ofgem's cap for 1 October to 31 December 2026 is £1,723 a year for a typical dual fuel household paying by Direct Debit, a 4% rise on the July cap, adding around £60 a year⁴. The previous level was £1,663⁴. Electricity unit rates rose to 26.32p per kWh from 26.11p per kWh over the same change.

The comparison a household actually runs is between the fixed rate on offer and the capped rate it would otherwise pay, over the length of the fixed term. Because the cap is reset every quarter, a 12 month fix is a bet on four cap decisions, and a 24 month fix on eight. The evidence on whether that bet has paid recently is mixed and dated. One analysis of 365 days of deals found average savings of £182 versus the cap across the year, while a September 2026 assessment found fixed deals offering smaller savings than previously because higher prices had pushed them up²⁷. Both point the same way: the advantage of fixing has varied through the year rather than being constant.

Exit fees and the 49-day switching window

Exit fees apply to fixed term deals, including some tracker tariffs, and cannot be charged in the last 49 days of the tariff⁵. The same window appears across the guidance: a customer in the last 49 days of a fixed term contract does not have to pay an exit fee and has the right to switch freely without being charged¹³. Customers are entitled to switch to a new deal or supplier from 49 days before the end of their contract¹⁴.

Outside that window, the fee is real. Exit fees are typically £100 or more⁵. A supplier should not charge a fee to switch supplier if the contract ends in the next seven weeks, which is the same 49 day period expressed in weeks¹⁰. The rule exists so that a household approaching the end of a term can shop without penalty rather than being held in place until the final day.

The timing that avoids a gap is narrower than the free window. Switching with 21 to 49 days left on the current tariff should avoid spending a few days or weeks on the current supplier's standard variable rate while the switch completes¹⁶. Switching earlier than 49 days means paying the exit fee; switching later risks a period on the default rate.

Fixed energy tariffs usually run for 12 to 24 months, so the window arrives once a year or once every two years⁵. Independent guidance suggests treating switching as a habit every 12 to 18 months¹⁴. The two figures describe the same rhythm from different ends: contract lengths cluster at a year, and the habit that matches them is annual.

Dual fuel: one supplier, one bill, sometimes cheaper

A dual fuel tariff means you get your gas and electricity from the same supplier, covered by the same tariff, with one point of contact and one monthly or quarterly invoice for both fuels²⁸. Pretty much all energy suppliers offer dual fuel tariffs, because they are cheaper and easier to manage for the supplier as well as the household²⁹. Whether a particular supplier offers one is up to that supplier and can differ from company to company, though most offer one³⁰.

The saving is not guaranteed. There is no guarantee that a dual energy deal is cheaper than separate gas and electricity tariffs, although suppliers tend to pass on some savings²⁹. Some suppliers offer a discount for having both fuels with them, and in some cases separate suppliers could still be cheaper¹¹. A reduced rate for dual fuel customers is offered by some suppliers rather than all²⁸.

The tariff type and the fuel arrangement are separate choices. Online tariffs can be either fixed or variable, and dual fuel options are available on both³¹. A household can hold a fixed dual fuel deal, a standard variable dual fuel deal, or two separate single fuel contracts, and the comparison has to be run on the rates rather than on the label. On the variable side the answer is clearer: a standard variable dual fuel tariff will cost more than a fixed dual fuel tariff most of the time³⁰.

Checking which arrangement is in place takes one document. A recent energy bill should show spending on both gas and electricity if the account is dual fuel, or the supplier can confirm it³⁰. The administrative saving is genuine and easy to state: less admin, because there is only one energy company to deal with².

Which tariff fits which household

There is no single answer, and the facts point to conditions rather than a recommendation. A fixed tariff suits a household that wants a known unit rate for a known period and does not expect to move house or change circumstances during the term. A standard variable tariff suits a household that values the right to leave at any time without a fee, and is willing to accept that it is usually the most expensive tariff on the market¹¹.

The evidence on what households actually do is weaker than the market data. Ofgem's research found considerably more consumers claiming to be on fixed tariffs, at 38%, than the official data suggests, at 11%⁸. Among those who say they are on a fixed tariff for electricity, 55% report being very confident this is the case and 38% somewhat confident⁸. Confidence and accuracy are not the same thing, and a household that cannot state its tariff type is not in a position to judge whether it is getting a good rate.

The conditions that push toward one or the other are concrete:

• Certainty of rate. A fixed tariff holds the unit cost and daily fee for the term; a variable tariff does not¹².
• Freedom to leave. A standard variable tariff carries no exit fee at any point; a fixed tariff carries one outside the final 49 days¹⁶.
• Expected direction of the cap. A fix signed when the cap is expected to rise protects the rate; a fix signed when it is expected to fall locks in the higher one²⁶.
• Household stability. A move, a change in occupancy or a switch to a different heating setup all interact badly with a fixed term and an exit fee.

When your fixed deal ends: rollover and what to do next

The end of a fixed term is automatic and unglamorous. The supplier will automatically move you onto the standard variable tariff when the fixed deal ends, and should remind you when the contract is about to end¹⁰. When a fixed rate has expired, the supplier moves the household to the standard variable tariff, which is typically higher than fixed rates¹⁵. Customers rolling off a fixed price tariff are usually rolled onto their supplier's standard variable tariff¹¹.

The rules on what happens next were set well before the current cap. At the end of a fixed term, customers can no longer be rolled over to another fixed term offer, and by default the account rolls over to the cheapest evergreen tariff of the same type³³. The consumer rolls on to the cheapest evergreen tariff unless they make an active choice³³. The principle was described at the time as no surprises, no lock-ins.

The practical sequence is short:

1. The supplier should remind you before the contract ends¹².
2. If no new deal is chosen, the account moves to the standard variable tariff automatically¹⁰.
3. That tariff is capped, so the rate is limited, but it is usually the most expensive the supplier offers¹¹.
4. If the fixed tariff has already ended, you can still switch supplier or tariff¹⁰.

The last point matters because households often assume the moment has passed. It has not. A household that rolls onto the default rate can leave at any time without a fee, because standard variable tariff customers can switch at any time without incurring any fees¹⁶. The cost of inaction is the difference between the fixed rate that was available and the capped default rate, for as long as the household stays there.