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Updated: 5 Jul 2022

Energy tariffs explained

Find out the difference between energy tariffs to understand which is best for you.
Marianne Calnan
Comparing energy tariffs

With energy prices reaching record highs in 2022, competitively priced energy tariffs are few and far between.

Find out the difference between fixed deals and variable tariffs, what the other different types of tariffs are and how they work, so you can work out which one is most suitable for you. And when you're ready, you can start comparing energy tariffs using Which? Switch.

Find out more with our guide to getting the best energy deal.

Types of energy tariffs 

Energy tariffs are the set rates that you pay to your energy provider for gas, electricity or both. They come in two basic types: fixed or variable. 

Which type suits you and your household best is dependent on how much certainty you want over the price you pay and how often you want to switch provider or tariff.

Variable energy tariffs

Often called 'standard' tariffs, variable tariffs change price each time your supplier changes its rates. Your provider’s default (or out-of-contract) tariff will usually be variable. You may also see it referred to as an 'evergreen' tariff.

If you didn’t switch provider or renew your tariff after your last fixed deal ended, it's very likely that you're on a standard variable tariff or default tariff. 

Default tariffs are subject to the energy price cap. This is effectively a cap on the price charged for each unit of energy, rather than a cap on your total bill. The cap is reset by energy regulator Ofgem every six months. 

Will I be charged a fee for leaving? No. Standard tariffs do not tie you in with a contract or exit fees, so you can leave whenever you like.

This tariff is a good option if: you want flexibility and don't want to be tied down to a contract.

You should watch out for: prices can increase or decrease, though suppliers have to give you a month's notice of any changes to your rates.

Fixed energy tariffs

Fixed deals set the rate you pay for each unit of energy you use with guaranteed standing charges and unit rates, usually until a defined end date. 

Should your energy company raise its variable prices, you won’t be affected – but you won’t benefit if prices drop, either. You know the price you pay for energy won’t change during the period of your contract - usually 12 or 24 months. 

Will I be charged a fee for leaving? Some fixed tariffs have an exit fee if you leave before your contract end date. Ofgem rules mean that you can switch 42-49 days before the end of your tariff and your supplier cannot charge exit fees. Some charge no exit fees - a good option at the moment as the energy market is changeable. 

This tariff is a good option if: you want peace of mind about exactly what you'll be paying every month for a set period. Fixed deals are usually the cheapest option, but at the moment you'll likely pay a premium for price stability. 

Watch out for: if you increase the amount of energy you use, the amount you pay will go up as fixed tariffs only guarantee the cost of the standing charge and the pence per kilowatt hour cost of gas or electricity, not the overall bill. In summer 2022, almost all fixed deals are more expensive than variable tariffs, which are limited by the price cap.

Use Which? To Switch Energy Provider

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Which energy tariffs are cheaper? 

Very few cheap energy deals are available at the moment - either fixed or variable. In most cases, supplier's cheapest deals are their price-capped variable tariffs. 

Suppliers have previously offered a range of cheap one-year fixed deals, but since wholesale energy prices rocketed in autumn 2021, these have all but vanished from the market.

The price cap on out-of-contract or default variable tariffs doesn't mean that suppliers have to charge this amount, but when we looked at the variable tariffs of the most popular 15 energy companies in spring 2022, we found that they were all at the level of the price cap, meaning its not really worth switching between different companies' variable tariffs.

Dual fuel tariffs

Gas and electricity meters

A dual fuel energy tariff means you pay for your gas and electricity through the same energy supplier. It can make life easier through decreased admin, but also often opens up the cheapest tariffs.

This tariff is a good option if: you want the convenience of just dealing with one supplier for your gas and electricity. Many dual fuel tariffs also offer a discount for taking both gas and electricity from the same company.  

You should watch out for: the amount of discount dual fuel offers does not always outweigh the potential savings of going with two separate suppliers for gas and electricity.

Which? Switch allows you to see rates for both dual fuel and separate gas and electricity tariffs.  

Online energy tariffs

Online energy tariffs require you to deal with your energy provider through an online account, usually in return for a discount. You will be asked to send meter readings online and will receive 'paperless' bills. 

Usually, this means your bills will be sent as attachments to emails or will be available to download from your personal account area on the supplier's website. YOu can also often access your account information through a smart phone app.

If you prefer to receive paper bills in the post, an online tariff may not be for you. 

This tariff is a good option if: you want the cheapest possible tariff and you prefer managing everything online.

You should watch out for: if you opt for an online tariff, many suppliers will send all important correspondence via email rather than through the post. 

Prepayment energy tariffs

These tariffs are for customers who pay in advance for gas and electricity. You'll need a prepayment meter in your home. You top up this meter using prepay tokens, cards or a key.

Can I switch my prepayment tariff? You can usually switch suppliers and get a new prepayment tariff as long as you have less than £500 of debt on your meter. Some smaller providers may have lower debt limits.

If you want to pay by a different method, your supplier may charge you for installing a new meter. They may refuse to allow you to leave prepayment if you are in debt.

This tariff is a good option if: you find prepaying is an easier way to manage your bills. Find out whether a prepayment meter is right for you.

You should watch out for: expensive prices. Prepayment is one of the priciest ways to pay for gas and electricity, plus tariff options are more limited for prepayment customers. Prepayment tariffs are subject to a higher price cap than others.

Which? Switch displays all the prepayment tariffs currently available on the market.

Green energy tariffs

Energy tariffs can be deemed green for a few different reasons. They'll often be labelled 100% renewable, though this claim isn't always as straightforward as it seems. Some providers invest in their own green energy generation, while others pay into environmental schemes. Find out more about the differences between green energy suppliers 

This tariff is a good option if: you are concerned about the environmental impact of your gas and electricity use. Green tariffs are not always more expensive so you can get a good deal by shopping around.

You should watch out for: some green tariffs charge higher than average prices. You should also look carefully at what exactly the green tariff entails, as some have more direct environmental benefits than others. 

Economy 10 and other 'time of use' tariffs

These tariffs offer cheaper electricity at times when there is lower demand on the National Grid. 

Not all energy suppliers offer 'Time of Use' tariffs, and those that do may not offer them to new customers. They aren't available through Which? Switch or other comparison sites. You'll need a special type of energy meter that can determine how much energy you use at certain times of day. 

If you have a time of use tariff, it's really important to make sure that your meter is reading the correct time, as we've had reports in the past of time of use meters being set to the wrong time and therefore recording usage incorrectly.