Should I fix my energy prices? Here's what to consider

Energy bills are a big expense for UK households. With prices expected to rise, you might be wondering if you should lock in your rates now with a fixed tariff, or stick with a variable one. Let's break this down in simple terms.

What's happening with energy prices?

Energy prices in Great Britain are regulated by an independent group called Ofgem (Office of Gas and Electricity Markets). Their role is to protect consumers by ensuring energy suppliers are treating them fairly.

One way they do this is to monitor and regulate the cost of energy, which Ofgem do through the energy price cap.

What is the energy price cap?

The energy price cap is a limit set by Ofgem on how much energy companies can charge customers for their gas and electricity. It works like a ceiling on prices, stopping suppliers from charging too much for basic energy needs.

The energy price cap only limits what suppliers can charge per unit of energy and the standing charge - it doesn't limit your total bill, which depends on how much energy you use.

When does the energy price cap change?

Ofgem reviews the energy price cap every three months. From April 2025, the cap is going up by 6.4%. This means energy companies can charge you up to 6.4% more if you’re on a variable tariff. Fixed tariffs, meanwhile, are set outside the cap mechanism.

What's the difference between fixed and variable energy tariffs?

Fixed tariffs: Your price per unit of energy stays the same for the length of your contract (usually 12-24 months). Think of it like booking a holiday early - the price won't change even if costs go up later.

Variable tariffs: Your price changes when the energy price cap changes (every three months). This is like waiting to book your holiday at the last minute - it might be cheaper or more expensive depending on the market.

The case for fixing

Fixing your energy prices essentially means you're betting that prices will go up enough to make your fixed rate a good deal. Here are some reasons you might want to fix:

✅ Peace of mind: You'll know exactly what you're paying for the duration of your fix

✅ Protection from price hikes: If prices do rise significantly, you'll be shielded

✅ Easier budgeting: Your energy costs become predictable

The case against fixing

On the flip side, there are reasons you might want to stay variable:

❌ Potential savings if prices fall: If energy prices drop, you'll benefit immediately on a variable tariff

❌ No exit fees: Most variable tariffs don't have exit fees, unlike fixed deals

❌ Flexibility: You can switch anytime without penalty

How to decide what's right for you

Ask yourself these questions:

1. Could you manage a change in monthly outgoings?
2. Can your budget handle potential price increases?
3. How long are you planning to stay at your current address?

If you’re thinking about fixing, compare deals. Look at how long the contract is (12 or 24 months) and check if there are exit fees. Sometimes paying a little more for a fix with no or low exit fees gives you more flexibility.

Remember – no one can predict exactly what will happen to energy prices. Do what feels right for you and helps you sleep at night.