Fixed-rate energy tariffs have started making a return to the energy market, Home Energy Scotland said in guidance published in February 20241. The body, which provides free and impartial advice to households in Scotland, set out how fixed-rate deals differ from variable ones and what a fixed contract does and does not guarantee1.
Under a fixed-rate tariff, the price paid per unit of energy stays the same even if the market price of energy changes1. Home Energy Scotland states plainly that this does not mean bills stay the same every month: as with other tariffs, the more units of energy a household uses, the more it pays1. A variable tariff is one where the price per unit can vary depending on what the supplier decides to charge, though Ofgem's Price Cap means suppliers cannot charge more per unit than the cap allows1.
"The main advantage of a fixed-rate tariff is that it locks in the price per unit of energy. This means you can protect yourself from potential increases in energy prices"
The guidance notes the trade-off. Energy prices are unpredictable, and if prices fall during a fixed-rate contract a household may end up paying more than it would on a variable tariff1. Fixed-rate tariffs often involve contracts lasting a set period, such as 12 months, and leaving before the contract end date might result in exit fees; the guidance says to check whether exit fees would apply and how much they would cost1. It also notes that because the unit price stays the same, consumption can be compared month by month more easily1.
| Feature | Fixed-rate tariff | Variable tariff |
|---|---|---|
| Price per unit | Stays the same even if market prices change1 | Can vary depending on what the supplier decides to charge1 |
| Cap protection | Not stated as applying to the unit rate | Ofgem Price Cap limits what suppliers can charge per unit1 |
| Contract length | Often a set period, such as 12 months1 | Not stated |
| Exit fees | May apply if leaving before the contract end date1 | Not stated |
Why it matters for households
A fixed rate fixes the price of each unit of gas or electricity, not the size of the bill, so a household's energy independence still rests on how much it uses and when1. Locking the unit price removes exposure to further increases for the length of the contract, but it also removes the benefit if prices fall, and the exit fee can make leaving early costly1. For a home weighing up fixed-rate energy tariffs, the terms that matter are the length of the contract, the exit fee and the unit rate itself. The wider choice between a fixed and variable tariff turns on how a household expects prices to move and how much certainty it wants, and the full guide to fixed, tracker, time-of-use and export rates sets out how these products differ. How a tariff choice feeds into a home's overall energy independence depends on usage and circumstances, which the guidance says determine the best deal for any household1.
What happens next
No dated next steps are given in the guidance. It directs readers to Ofgem's advice on switching energy supplier, and states that Home Energy Scotland's advisors are available Monday to Friday 8am to 8pm, and Saturdays and bank holidays from 9am to 5pm, with information available in translation, in audio and in large print or braille on request1.
Sources1 cited
- Fixed-rate tariffs - should you switch? | Home Energy Scotland, homeenergyscotland.org