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Fixed rate tariffs are often one of the cheaper options for your energy bills – but they do come with some restrictions and potential downsides. Here’s what you need to know before you decide to go for a fixed rate energy tariff.
With a fixed rate tariff, the rate you pay for your energy is fixed for a certain length of time, typically 12 months. It doesn’t mean your energy bills stay the same price each month – they’ll go up and down depending on how much gas or electricity you use. It means that the cost of your energy per unit stays the same, regardless of what happens to the wholesale price in the market. You’re generally locked into a fixed rate tariff for the whole of the term and will have to pay exit fees if you want to end it early. While most fixed rate tariffs last 12 months, some suppliers offer longer terms, up to three or even four years. When your fixed rate tariff ends you'll be switched to the supplier's variable rate, so you will probably need to look for a better tariff as your contract comes to an end.
Unlike a fixed tariff, with a variable tariff the price of your energy can go up and down according to energy rates at the time. Variable tariffs are flexible because you’re not usually tied into a contract. You can change supplier (or tariff) whenever you like, without any restrictions like exit fees. The downside is that flexible tariffs tend to be more expensive.
Fixed rate tariffs tend to be one of the cheaper options and are good for budgeting because, as long as your energy use year-on-year is consistent, your bills will be around the same amount, as the same rate is applied to your usage. If you use more gas and electricity in the winter months, you’ll need to make sure you factor this in when you budget your household expenses. Your annual consumption from last year should give you an idea of what this is, so check your old bills or online account. If you need a hand to calculate it, we can help you estimate this when doing a quote. The drawback of fixed tariffs is that if energy prices go down you won’t benefit because you’re locked into paying the fixed price until the end of the term.
With a fixed rate tariff, the amount you pay for each unit of energy and the daily standing charges are fixed to a set date in the future – but the size of your bill will depend on how much energy you use. These tariffs will help protect you from energy price rises. Within fixed rate tariffs there are various options you can consider and choose to suit your needs:
Need more detail? Read our guide, energy tariffs explained.
It’s simple – just compare energy suppliers and choose the ‘fixed rate tariff’ option when we ask which tariff you’re interested in. Then choose a quote that suits you and apply online. Don't forget it's worth having a look to see whether you can get a cheaper deal if you choose both gas and electricity from the same supplier or different suppliers.