Fixed Price Energy Tariff vs Variable Rate Energy Tariff

While switching gas and electricity providers or plans, you may be confused regarding whether to choose a fixed rate tariff or a variable rate tariff. Here is given a detail comparison of Fixed Price Energy Tariff vs Variable Rate Energy Tariff that help you in deciding which one is to choose.

Fixed Rate Energy Tariff

Fixed rate tariff has a fixed rate for a given period (usually 12 months), irrespective of changing energy prices in the market. So, even if your supplier hikes energy prices, you still get to enjoy services at a lower rate. Fixed rate contracts usually come with an early termination fee (roughly £25 – £50).  It prevents you from switching providers within the contract period. Many people prefer fixed rate plans as they offer security against rising energy prices. But the downside to this is that if energy prices come down, you will have to choose between paying more for energy or paying the early termination fee and switching to a different plan.

A few providers do provide fixed rate plans without an early termination fee. Such plans are a good option as they protect you from rising energy prices and also give you the flexibility to switch without incurring a penalty.

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If you are on a fixed rate plan and your contract is about to expire, then you can choose to switch providers within 49 days of contract expiry without facing an exit fee.

Variable Rate Energy Tariff

Variable tariffs are often the lowest tariffs available in the market. But they do vary from time to time depending on market prices of gas and electricity. So, if you have signed up for a variable tariff plan, you may face a sudden increase in tariff and hence, your energy bill, due to an increase in energy prices. But variable energy plans mostly give you the freedom to change providers at any time. So, if you find your bills increasing, you can consider switching to a provider with a lower tariff.

Variable energy plans are considered to be riskier than fixed tariff plans as they expose you to fluctuating energy prices, thus making it difficult for people to plan their budget properly.

It is best to take a fixed tariff if market predictions indicate an increase in energy prices. However, if the market has been largely volatile or is on a downward trend, a variable tariff can help you to take advantage of low prices immediately.

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