Energy tariffs explained

Competitively priced gas and electricity tariffs are growing in number, so it's worth keeping a look out to see if you could save money.

Energy prices are still much higher than before the energy crisis. The price cap rose by 6.4% in April 2025 and will decrease by 7% in July 2025 - though this still leaves it higher than it was in July 2024.

You may be able to save with a fixed deal with prices cheaper than the price capped rates, if you pick one that suits your home.

Find out the difference between fixed deals and variable tariffs, what the other types of tariffs are and how they work.

Then find out how to get 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 your household best depends on:

• how much certainty you want over the price you pay 
• how often you want to switch provider or tariff.

Use our free, independent energy comparison service to compare gas and electricity prices and find the best provider for you.

Variable energy tariffs

Variable tariffs change price each time your supplier changes its rates. 

They're known by several names:

• standard variable tariffs
• default tariffs
• out-of-contract tariffs
• evergreen tariffs.

They're the most common tariff customers are on at the moment.

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. 

These 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, and is reset by energy regulator Ofgem every three months. 

Read more about: the energy price cap.

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 into a contract.

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

Fixed energy tariffs

Fixed deals set the rates you pay for the length of your contract. They fix the amount you pay for each unit of gas and electricity you use, and your daily standing charge.

So you know the prices you pay won't change for the length of your deal (usually 12 or 24 months).

Your bills or direct debit payments aren't fixed. They depend on how much energy you use.

If your energy company increases its prices, you won't be affected. But you won't benefit if prices drop either. 

See the cheapest fixed tariffs on offer and how to get the best energy deal.

Will I be charged a fee for leaving? Most fixed tariffs have an exit fee if you leave before your contract end date. £75 per fuel is common on a 12 month deal at the moment. But you can switch without paying an exit fee in 42-49 days before the tariff ends. Some companies offer zero exit fee tariffs, usually for slightly higher rates.

This tariff is a good option if: you want to know exactly what rates you'll be paying for a set period. 

Watch out for: whether you'll end up paying more with a fixed deal than staying on the price-capped variable rate. Prices are expected to remain relatively stable in 2025, though predictions can always change as the global energy market is still somewhat volatile.

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Tracker tariffs

A newer addition to the ever-growing list of tariff options, some energy providers also offer tracker tariffs that occupy the middle ground between variable and fixed tariffs. There are currently two main types of tracker tariffs available: Capped and dynamic.

With a capped tracker tariff, your energy prices will adjust every three months depending on the price cap. However, your unit prices will always be lower than the price cap. Tracker tariffs also have lower standing charges than variable or fixed tariffs. Only a few providers currently offer these tariffs. 

Tracker tariffs are for a fixed term, usually 12 months, and generally do not have exit fees. Capped trackers often refer to a ‘price cap guarantee’ in their terms and conditions. 

Unlike capped tracker tariffs that adjust prices every three months, dynamic tracker tariffs adjust their prices every day (or, in some cases, every half hour). Dynamic trackers are capped, but at much higher rates than standard tracker tariffs. Agile Octopus, for example, has a cap of 100p per kWh for electricity. 

Some dynamic tracker tariffs will even pay you to use electricity when there is an excess on the grid. 

This tariff is a good option if: you’re not ready to fix your prices, you’re looking for the most transparent tariff and can dramatically shift your energy consumption at a moment's notice.

Watch out for: Depending on your usage, a tracker tariff could work out to be more expensive than the price cap. 

Economy 7 and other 'time of use' tariffs

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

You'll need energy meters that can determine how much energy you use at certain times of day to access them. 

Most providers only offer TOU tariffs to customers with electric vehicles or heat pumps. 

This tariff is a good option if: you're able to use a high proportion of your electricity during the cheaper hours.

Watch out for: peak rates are often very pricey so could cost you more if you have to use lots of electricity at popular times.

Prepayment energy tariffs

Prepayment, or pay-as-you-go, tariffs mean that you pay in advance for your energy, by topping up.

You'll need a prepayment meter, or a smart meter set to prepayment mode, to access them.

If you have a smart prepayment meter, you can usually top-up online, or via your energy company's app. 

Traditional prepayment meters are topped-up using prepay tokens, cards or a key. 

Can I switch my prepayment tariff? You can switch supplier and tariff as long as you have less than £500 of debt on your meter. Smaller providers may have lower limits.

If you want to pay a different way and have a smart meter, your energy company will need to change it to 'credit mode'. They can do this remotely.

If you have a traditional prepayment meter, you'll need a new meter. You supplier might charge you for this. 

If you're in debt, your energy firm may refuse to change how you pay.

Find out whether a prepayment meter is right for you.

This tariff is a good option if: you find pre-paying is an easier way to manage your bills. Since April 2024, prepayment price-capped tariffs have been slightly cheaper than direct debit tariffs on the price cap, though you don't get the same fixed options.

You should watch out for: more limited tariff options. There is currently one supplier selling fixed deals for prepayment customers.

Which energy tariffs are cheaper? 

There's currently a choice of fixed energy deals that could save you money compared with the April to June price cap and the price cap that will come into effect on 1 July.

This includes tariffs that are available to new customers as well as existing ones. 

See the latest cheapest deals on the energy market: our guide to how to get the best energy deal

Before you switch, check that a fixed deal will save you money compared to staying on your supplier's price-capped rates. Sometimes there's little difference between a supplier's price-capped variable tariff and cheapest fixed-term tariff.

The price cap on out-of-contract or default variable tariffs doesn't mean that suppliers have to charge this amount but they tend to. So it's not really worth switching between different companies' variable tariffs.

If your fixed-term contract is running out, your energy supplier will suggest new deals. These may be higher than the variable or default tariff. You do not have to choose any of them.

If you simply do nothing, you'll be switched to the variable tariff at the end of your contract.

Zero standing charge tariffs

A few providers now offer zero-standing charge tariffs. These tariffs make up for the lack of a daily standing charge with a higher rate for each unit of electricity and gas used. So while they could be a good option for those who use little to no energy over long periods, higher unit rates may mean they aren't cost-effective for those with typical energy use. 

If you're looking into a zero standing charge tariff, you'll need to weigh up how much you could expect to pay on it compared to a typical tariff. 

See how the energy price cap works and whether it applies to your bills: What is the energy price cap?

Other common tariff types and terms to look out for

Dual fuel tariffs

A dual fuel energy tariff means you pay for your gas and electricity through the same energy supplier. 

They can be cheaper than paying for gas and electricity separately and mean less admin. 

This tariff is a good option if: you want the convenience of having only one energy supplier. They can be cheaper than buying gas and electricity separately. 

You should watch out for: the dual fuel discount does not always outweigh the potential savings of having separate suppliers for gas and electricity.

Online and paperless energy tariffs

Online energy tariffs mean you can only deal with your energy provider online, usually in return for a discount. You'll need to send meter readings online and will get 'paperless' statements.

This usually means your bills will arrive as email attachments or you'll be able to download them from your account on the energy firm's website or via your app. 

Sometimes you must contact your energy supplier online only too - i.e. through live chat or email, rather that phone.

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. 

Green energy tariffs

Energy tariffs sometimes make environmental claims including that they are 100% renewable. This claim isn't always as straightforward as it seems. 

Some energy 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 aren't always more expensive.

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