Fixed rate tariffs are popular with both businesses and households. Many choose fixed rate energy to avoid fluctuations in the market and to provide some security on their monthly energy bills.
These types of tariffs come with a fixed unit price. They are great if wholesale energy prices are lower than usual as consumers can fix those prices from 1-5 years.
Our experts have compiled all the information you need to know about fixed energy tariffs to help you decide if this is the right type of tariff for you.
What Is a Fixed-Rate Tariff?
Fixed-rate energy tariffs allow consumers to lock in energy unit prices. Savvy consumers can request a fixed tariff when unit prices are low and enjoy the same rate for the length of their contract. Typically, fixed contracts last anywhere from 1 year to 5 years, although longer contracts are not typically available for domestic energy. Energy suppliers are hesitant to offer longer fixed contracts because of potential market fluctuations.
How Do Fixed Rate Tariffs Work?
Fixed price energy tariffs can often seem too good to be true. Although a fixed price energy tariff seems great, many are confused when their energy bills come back at different prices each month. This is because your price per kWh of gas and electricity is fixed, but the price may change based on how much energy you use in any given month.
For example, your energy bills may cost a little more during the winter months as you will be using more energy to heat your home and business.
Advantages of Fixed Price Energy Tariffs
Most energy suppliers will offer great fixed price energy deals and here are some of the benefits:
- Market fluctuations will not cause your drive your energy costs up. Once you have locked in a price per unit, you do not have to worry about energy prices. Business energy customers who need a lot of electricity can power their premises for less when they secure a fixed contract at the right time.
- Fixed tariffs are often the best value for money option on the market.
- If you use the same amount of energy each month your bill will be the same. This is ideal for home energy consumers that monitor their usage on a smart meter.
- Fixed tariffs offer consumers peace of mind.
- Fixed tariff bills are less complicated than bills on other tariffs. The unit rate never changes, which means that consumers do not have to wonder about new numbers on their bills.
- With our comparison generator, finding a cost-effective fixed-rate tariff has never been easier. Simply put your details in and find a range of deals in under 60 seconds.
Disadvantages of Fixed Energy Tariffs
Fixed price energy is not for everyone. There are some situations where you could be paying more in energy costs:
- Fixed tariffs might offer short-term savings, but no one can predict how the energy market will fluctuate in the future. Business energy consumers might regret locking in a price per unit for a few years, especially if they use a lot of electricity.
- Most suppliers put cancellation fees in fixed contracts. Consumers must pay between £25 to £60 to cancel their contract, which makes it more difficult to find a cost-effective switch.
- Consumers need to make a decision before their fixed tariff contract ends. If you do not renew your contract or switch to a different deal, your supplier will automatically transfer you to a standard variable rate tariff. These tariffs are far more expensive than fixed or dual fuel tariffs.
Is a Fixed-Rate Tariff Better Than a Variable Energy Tariff?
This largely depends on your situation and what the energy market could look like in the future. Nothing is guarantees and that means that a fixed rate energy tariff may not be the cheapest in six months’ time.
The key difference is fixed-rate tariffs come with a consistent unit per price rate, variable tariffs have a unit rate that fluctuates with wholesale energy prices.
Home energy and business energy consumers who are on variable tariffs are subject to fluctuating prices. Prices fluctuate when wholesale energy prices change or simply when suppliers decide to increase per-unit prices. Suppliers have the right to change variable tariff unit rates whenever they want. By law, energy suppliers must notify consumers 30 days before price changes.
Fixed energy is much better for households and companies that want stability. We recommend fixed tariffs for people who are comfortable paying a certain fixed price for a few years.
It is much easier to switch home energy suppliers with exit fees being as little as £30 per fuel or even free. So if the marker prices do get cheaper during your fixed rate energy tariff, it is easy to switch. Businesses must ensure they are happy with the fixed price energy contract they are signing because they must stick with their energy supplier until the deal runs out.
Variable contracts do not come with exit fees, which means that they are ideal for start-up companies and homeowners who might move or expand in the near future.
Which Suppliers Offer Fixed-Rate Tariffs
Fixed tariffs are one of the most popular types of tariffs on the market. Most suppliers offer fixed, variable, and dual fuel tariffs as standard. It is no surprise that the big six energy companies in the UK offer fixed tariffs. Home and business consumers can read our British Gas, EDF Energy, E.ON, nPower, ScottishPower, and SSE guides for a comprehensive overview of the big six.
At Power Compare, we streamline the research process. If you want to know which suppliers offer fixed-rate tariffs at a glance, we recommend our comparison generator. Business owners can compare suppliers and homeowners can compare suppliers on our site. You can find a range of suppliers that offer fixed tariffs in just 60 seconds. Our comparison site provides consumers with all the information they need to make an informed decision.
Ready to choose your fixed price energy tariff? From choosing your energy supplier and finding great fixed rate deals we can help you save money in minutes. Our team will handle the switch for you, so you can get on with doing things you enjoy.
Fixed Energy Tariff FAQs
What happens at the end of a fixed price tariff?
When your fixed price energy plan comes to an end, you energy supplier will move you over to a standard variable tariff. These can be more expensive depending on current market prices, so it is better to compare fixed rate energy deals. It’s always worth shopping around a month or two before your fixed tariff comes to an end. For business energy, renewal windows can open unto 12 months before the end of your current fixed price plan.
Can you switch to a better energy deal from a prepayment meter?
You can switch from a prepayment meter if there is no debt on the account.
Some energy suppliers charge a fee to install a new gas and electricity meter. It is worth shopping around to see if you can save on your energy bill.