There are two main types of tariffs to consider in the UK energy market, these are fixed tariffs and variable tariffs. Understanding the different tariffs and making an informed decision about which one is most suitable for your household can help you save a lot of money.
A fixed tariff simply means that your unit price for gas and electricity is fixed, this means that it will not change for the duration of your plan. For instance, you might have a 12-month contract with a supplier, and you may pay £50.00 per month. On this fixed tariff, the price will not change for the full duration of the agreement. Keep in mind that once you are on a fixed tariff, you will have to pay a fee to exit early.
On the other hand, a variable tariff means that your unit price for gas and electricity is variable, meaning that your costs can vary at the discretion of the supplier. This means that depending on wholesale energy prices, your monthly bill can go up or down, depending on market conditions. This may seem like a disadvantage, but the upside to having a variable tariff is that you can usually leave your agreement if you find a better deal elsewhere without paying an exit fee.