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Compare tariffs using your home’s actual annual electricity and gas consumption, not a typical-household illustration. Multiply each fuel’s annual kilowatt-hours by the offer’s unit rate, add 365 days of standing charges, then account for discounts, payment conditions, contract length and any exit fee. A fixed tariff buys rate certainty for a defined term; a variable tariff leaves rates exposed to changes (with covered default tariffs in Great Britain subject to Ofgem’s price cap). The cheaper choice depends on your usage, meter, region, payment method and tolerance for price and contract risk.

What fixed and variable tariffs actually fix

A tariff has two main prices for each fuel: a unit rate, charged per kilowatt-hour (kWh), and a standing charge, charged per day. You pay the standing charge even on a day when the meter records no consumption. Electricity and gas must be compared separately because their unit rates and standing charges differ.

Fixed-rate tariffs

A fixed tariff keeps the agreed unit rates and standing charges unchanged for the contract term. Your total bill is not fixed: using more kWh still costs more, and using less costs less. A fixed deal also does not protect you from non-price changes such as a change in consumption or a one-off contractual charge. Leaving before the end may trigger an exit fee, so the term and fee are part of the price decision.

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Variable tariffs

A standard variable tariff can change its unit rates and standing charges. In Great Britain, covered default tariffs are subject to Ofgem’s price cap. The cap limits the maximum unit rate and daily standing charge that suppliers may charge for those tariffs; it is not a ceiling on your annual bill. A household that uses more energy can still pay more, and a household that uses less can pay less.

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Fixed tariffs sit outside the cap. A supplier can offer a fixed rate above or below the current capped rates, and the cap does not automatically reduce it. This makes the choice a trade-off: a fixed deal exchanges exposure to changing variable rates for a contractual commitment.

This guidance concerns England, Scotland and Wales, where Ofgem publishes the cited cap figures. Northern Ireland has a different regulatory and market arrangement, so do not apply these figures there without checking the relevant local guidance.

Collect the right information before requesting quotes

Have the following ready. Ofgem’s switching guidance lists the postcode, current supplier and tariff, unit rates and annual energy use as the core information for a comparison.

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  • Postcode and region: suppliers use the property’s distribution region when setting rates.
  • Current supplier and tariff name: identify whether you are on a fixed, standard variable or another tariff.
  • Annual consumption: obtain the latest annual kWh figures for electricity and gas from a bill or annual statement. If you have a smart meter, use a full year’s validated data where available.
  • Unit rates and standing charges: record the figures for each fuel, including the units in which they are quoted.
  • Payment method: Direct Debit, prepayment and other methods can have different rates or eligibility rules.
  • Meter type: note whether you have a standard meter, smart meter, prepayment meter or a multi-rate electricity meter.
  • Contract end date and exit fee: a fixed deal may charge for leaving early. Read the current contract rather than relying on a generic supplier statement.
  • Special conditions: check paperless billing, Direct Debit requirements, smart-meter installation, bundled services and any time-limited discount.

Do not substitute a supplier’s “typical household” consumption for your own. It can make a tariff look cheap for a usage pattern that does not match your home.

Calculate an annual cost on a like-for-like basis

For each fuel, use this calculation:

annual cost = annual kWh × unit rate (£/kWh) + 365 × daily standing charge (£)

Perform the calculation separately for electricity and gas, then add the two results. If a quote gives rates in pence, divide by 100 before multiplying by kWh. Finally, include any stated discount, one-off charge, credit, payment-condition effect or early-exit fee. The arithmetic is an estimate based on the tariff’s published rate structure, not a supplier’s binding quote; the offer’s terms control the final amount.

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Why standing charges change the result

A low unit rate does not necessarily produce the lowest annual cost. The standing charge is incurred every day, so it has a larger proportional effect in a low-use home. For example, reducing electricity consumption does not remove the daily electricity charge. Compare both components rather than ranking tariffs by pence per kWh alone.

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A worksheet you can reproduce

Input Electricity Gas
Annual consumption (kWh) Use the latest annual meter figure Use the latest annual meter figure
Unit rate Offer’s £/kWh rate Offer’s £/kWh rate
Usage cost Electricity kWh × electricity rate Gas kWh × gas rate
Daily standing charge Offer’s £/day charge Offer’s £/day charge
Annual standing-charge cost Daily charge × 365 Daily charge × 365
Annual subtotal Usage cost + standing-charge cost Usage cost + standing-charge cost
Adjustments Apply discounts, credits, fees and payment conditions exactly as stated

Repeat the worksheet for every offer. Keeping the same consumption figures across offers isolates the tariff difference; changing the consumption assumption between offers does not.

Use the 2026 price-cap figures as context, not as your personal bill

For 1 October to 31 December 2026, Ofgem reports the following average Direct Debit cap rates across England, Scotland and Wales:

Fuel Unit rate Daily standing charge Qualification
Electricity 26.32p/kWh 54.83p/day Average capped Direct Debit rate for the stated quarter
Gas 7.97p/kWh 29.68p/day Average capped Direct Debit rate for the stated quarter; displayed figure includes 5% VAT

Ofgem’s price-cap rate table explains that actual rates vary by region, payment method, fuel and meter type. The electricity figure is shown with zero VAT for 1 October 2026 through 31 March 2027 under the tax treatment stated on that page. These are averages, not an individualized quote, and they apply only to the specified quarter.

The cap’s scope is explained in Ofgem’s price-cap and standing-charge guidance. It limits covered per-unit rates and standing charges, not the total annual amount. Do not multiply a published “typical annual bill” illustration by your own circumstances or treat it as a forecast.

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Compare each offer across the dimensions that affect the decision

Put the results in one table so a low unit rate cannot hide a high standing charge or an expensive commitment.

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Comparison dimension What to record Why it matters
Annualized cost Electricity and gas subtotals at your actual kWh Converts different rate structures into one household-specific figure
Unit rates Separate electricity and gas pence per kWh Determines how strongly consumption changes the bill
Standing charges Daily charge for each fuel Applies every day, including days with no usage
Price exposure Fixed rates versus variable-rate changes Shows whether you are buying certainty or accepting movement
Contract duration Start and end dates Determines how long a fixed commitment lasts
Exit fee Amount and circumstances for leaving early Can erase an apparent saving if you switch again
Payment and meter eligibility Direct Debit, prepayment, smart or multi-rate requirements A quoted rate may not be available for your setup
Time-of-use fit Peak and off-peak rates plus your usage split Essential for Economy 7 and other multi-rate electricity tariffs

Handle Economy 7 and other multi-rate electricity correctly

A multi-rate tariff cannot be assessed with one electricity unit rate. Record the peak rate, off-peak rate and the standing charge, then split your annual electricity consumption by the meter’s actual time bands:

electricity cost = peak kWh × peak rate + off-peak kWh × off-peak rate + 365 × standing charge

Use a year’s meter data or a reliable time-of-use history to estimate the split. A tariff with a very low off-peak rate may cost more if most of your household’s electricity is consumed during peak hours. Confirm the meter’s switching times and the supplier’s eligibility conditions before comparing the result with a single-rate offer.

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Balance savings against contract and price risk

When a fixed tariff can make sense

  • You need predictable rates for budgeting during the contract term.
  • The fixed offer’s annualized cost is competitive at your actual consumption.
  • You are comfortable remaining until the end date or have confirmed that the exit fee is acceptable.
  • You prefer to avoid a rise in variable rates even if a variable tariff could later become cheaper.

When a variable tariff can make sense

  • You want flexibility to change supplier or tariff without a fixed-term commitment, subject to the specific terms.
  • You believe the ability to benefit from falling rates is worth accepting the possibility of increases.
  • The variable offer has a lower annualized cost after standing charges and payment conditions.
  • The fixed alternative’s exit fee or contract length is unattractive.

Neither category is guaranteed to be cheaper. A fixed tariff is not automatically a bargain when its opening rates are below the cap, and a variable tariff is not automatically safer because the cap exists. Decide using the cost calculation and the risk you can realistically carry.

Switching procedure: from current bill to confirmed contract

  1. Establish your baseline. Write down current electricity and gas kWh, unit rates, standing charges, payment method, meter type and the annualized cost calculated from those figures.
  2. Check the current contract. Confirm whether it is fixed or variable, identify the end date and look for an early-exit fee. Include that fee in any comparison if you would leave before the term ends.
  3. Get comparable offers. Use suppliers directly or an energy price comparison website, as described by Ofgem’s switching guidance. Enter the same postcode, annual consumption, payment method and meter details for every search.
  4. Capture the full rate card. Save the electricity and gas unit rates, standing charges, contract dates, exit fee, discounts, payment requirements and any meter eligibility condition. Do not rely only on a headline monthly estimate.
  5. Normalize the annual costs. Apply the worksheet formula to every offer. For multi-rate electricity, use separate peak and off-peak consumption rather than an averaged rate.
  6. Stress-test the choice. Recalculate with a lower- and higher-usage scenario based on your household’s plausible range. For a variable tariff, consider that rates can change; for a fixed tariff, consider the cost of being unable or unwilling to leave without a fee.
  7. Verify the final terms. Check that the quoted rates apply to your region, fuel, payment method and meter. Confirm whether a discount is recurring, conditional or one-time, and whether tax treatment is already included.
  8. Submit the switch and keep records. Save the confirmation, tariff terms, start date and opening meter readings. On the changeover date, record readings for the old and new supplier and check the final bill against them.

Ofgem notes that the best offer may come from your current supplier. Comparison is about finding the suitable tariff, not necessarily changing company.

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Common comparison errors and how to correct them

Using the price-cap annual illustration as your expected bill

Problem: A cap illustration is an average based on assumptions. Correction: use your own annual kWh and the regional, payment-specific rates shown in the offer.

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Ranking only by unit rate

Problem: A low pence-per-kWh figure can be paired with a high daily charge. Correction: calculate 365 days of standing charges for each fuel before ranking.

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Ignoring the exit fee

Problem: A small apparent annual saving can disappear when an early-exit charge is paid. Correction: add the applicable fee to the first-year comparison and check the contract’s exact conditions.

Comparing the wrong regional or payment rate

Problem: An advertised average may not be available at your address or payment method. Correction: enter the postcode and payment method and retain the resulting offer details.

Treating a fixed rate as a fixed bill

Problem: The rate is fixed, but consumption is not. Correction: budget using the fixed unit rates and standing charges, then allow for changes in kWh.

Flattening Economy 7 into one rate

Problem: An average rate hides when electricity is used. Correction: split peak and off-peak kWh and apply each rate separately.

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Comparing a monthly Direct Debit amount instead of tariff prices

Problem: A monthly payment can reflect a supplier’s balance-management estimate rather than the underlying rates. Correction: compare unit rates, standing charges and annual kWh first; treat the payment amount as a cash-flow arrangement.

A practical decision rule

Choose the fixed offer when its annualized cost at your realistic usage is acceptable and the value of rate certainty exceeds the cost of commitment. Choose the variable offer when flexibility and potential access to falling rates matter more, and its standing charges and current rates remain competitive. If the difference is small, inspect the exit fee, contract end date, payment eligibility and multi-rate fit rather than deciding from the headline unit rate.

Before accepting either offer, read the supplier’s tariff summary and terms. Ofgem’s current cap figures are useful for context, but only the quote matched to your postcode, fuel, meter and payment method can answer what you would pay.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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