Energy prices continue to dominate the headlines in 2025. The Price Cap is set to rise by 2% in October, pushing the average annual energy bill to £1,755. With ongoing uncertainty in the market, many households are asking the same question: Should I fix my tariff now, or stick with a variable deal? 

What are the pros and cons of fixed tariffs?

A fixed tariff locks in your unit rates for a set period, protecting you from future price hikes - but you won’t see the benefits if prices fall. This stability makes it easier to plan and budget. You’ll know exactly what you’re paying for energy each month, regardless of wider market swings. 

However, most fixed tariffs will have an exit fee if you want to switch before the contract has ended. If you spot a better deal and want to switch before the end of your contract, you’ll need to factor these fees into your calculations to see if switching is still worthwhile. 

Pros of fixed tariffs:

• Protection from future price increases
• Easier household budgeting

Cons of fixed tariffs:

• Exit fees may apply if you leave early
• You won’t benefit if prices fall

What are the pros and cons of variable tariffs?

Variable tariffs can be beneficial if you value flexibility. Prices will change every 3 months with the price cap, so costs have the potential to rise and fall. It is also easier to switch tariffs or supplier when on a variable contract, as you are not locked in and will not have to pay exit fees. 

Variable tariffs change with the price cap and changes in wholesale prices. Remember, however, that the price cap is only a cap for the amount that suppliers can charge per kilowatt of energy, not an overall cap of how much they can charge you a year. If you use more energy, it is likely that your bill will go over the average amount of £1,755.

Pros of variable tariffs:

• No exit fees — switch anytime
• Potential to benefit from falling prices

Cons of variable tariffs:

• Bills rise if energy prices go up
• Less certainty for budgeting

Should I fix my energy tariff now?

Choosing to fix your tariff comes down to how much you value certainty versus how much flexibility you want. A fixed tariff locks in your prices for a set period, which is ideal if you want predictable bills. The trade-off is that you won’t benefit if prices drop. Financial expert Martin Lewis suggests a simple rule of thumb: if you find a fixed tariff that is up to 3% more expensive than the current price cap, it is likely that you’ll save money in the long term as it will protect you from future price increases.

If you are thinking about fixing, hopping around for the best deal will increase your chance at saving. There are currently fixed deals that are below price cap rates, which will protect you if rates increase in future price cap changes. 

Next steps to save on your energy bill:

1. Compare energy tariffs. Services like a switching platform will show you the best energy tariff deals available.
2. Check for exit fees and weigh them against potential savings.
3. Look for fixed deals priced below the cap as they offer protection and value.

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