Fixed energy deals: your path to predictable budgeting

Fixed energy deals offer a clear path to managing household costs, providing certainty in an often unpredictable market. By locking in your unit rates for electricity and/or gas, you gain control over a significant portion of your budget, freeing you from the constant worry of fluctuating energy prices. This approach allows you to plan your finances with greater confidence, transforming energy from a source of anxiety into a predictable expense.

When considering fixed energy deals, it's helpful to understand how they can stabilise your outgoings. Fuse Energy aims to provide clear pricing and tools to help you manage your energy use effectively. Click here to see how Fuse can help you take control of your energy bills.

What is a fixed energy deal?

A fixed energy deal, also known as a fixed tariff or fixed price energy deal, sets the unit rate you pay for your electricity and gas for a specific contract period. This means the price per kilowatt-hour (kWh) of energy you consume, and often the daily standing charge, remains constant throughout the deal's duration. This differs significantly from variable tariffs, where prices can change with market conditions.

Understanding fixed unit rates and standing charges

When you sign up for a fixed energy deal, you agree to a set unit rate for each kWh of electricity and gas you use. For example, the Ofgem Price Cap for electricity from 1 July to 30 September 2026 is 26.11p per kWh, but a fixed deal would offer a specific rate that remains constant regardless of changes to the cap during your contract term. Alongside the unit rate, a daily standing charge is also typically fixed. This is a flat fee applied daily to cover the cost of supplying energy to your home, regardless of how much you use.

How fixed tariffs differ from variable tariffs

The primary difference between fixed and variable tariffs lies in price stability. With a fixed tariff, your unit rates and standing charges are locked in for the contract's duration. In contrast, variable tariffs, such as the Standard Variable Tariff (SVT), can see their prices change, typically quarterly, in line with the energy price cap set by Ofgem. This means that while a fixed deal offers predictability, a variable tariff can expose you to both increases and decreases in wholesale energy costs.

How fixed energy deals work

Fixed energy deals typically operate over a contract period, offering a set price for your energy consumption. Understanding the terms, including contract length and potential exit fees, is crucial before committing.

Contract lengths and early exit fees

Most fixed energy deals usually last between 12 and 18 months. If you decide to leave your fixed deal before the contract ends, your supplier may charge an early exit fee. This fee is tariff-specific and will be shown at sign-up; for example, it might be around £50 per fuel. However, you can switch away from a fixed deal without penalty in the last 49 days of your contract, allowing a window to find a new deal before being rolled onto a potentially more expensive variable tariff.

The role of the energy price cap

The Ofgem energy price cap limits the maximum amount suppliers can charge per unit of energy for customers on SVTs. While fixed deals are not directly subject to the price cap, its level often influences the pricing of new fixed tariffs. When the cap is high, fixed deals might appear more attractive as they offer protection against further rises. Conversely, if the cap is expected to fall, fixed deals might seem less appealing.

Benefits of choosing a fixed tariff

Opting for a fixed energy deal offers several advantages, primarily centred around financial predictability and peace of mind.

Price certainty and budgeting stability

The most significant benefit of a fixed tariff is the certainty it brings to your energy bills. Knowing exactly what you'll pay per unit of energy allows for more accurate budgeting, helping you manage your household finances without the stress of unexpected price hikes. This stability is particularly valuable for households seeking predictable budgeting amidst market volatility. Understanding your energy usage, such as the running cost of an air source heat pump, can further enhance your budgeting accuracy.

Protection against rising wholesale costs

Fixed deals act as a shield against potential increases in the wholesale energy market. If wholesale prices climb during your contract, your unit rates remain unchanged, protecting you from higher costs. This can lead to substantial savings compared to being on a variable tariff during periods of market instability.

Peace of mind in volatile markets

In an unpredictable world, having a fixed energy deal provides a crucial sense of control and peace of mind. It removes the constant need to monitor market fluctuations and worry about their impact on your bills. This psychological relief empowers you to budget confidently and focus on other areas of your life, aligning with a vision of having more power to play with your finances.

Potential drawbacks and risks

While fixed deals offer stability, they also come with potential downsides that are important to consider.

Missing out on falling prices

If wholesale energy prices fall significantly during your fixed term, you might end up paying more than customers on variable tariffs whose rates would decrease. This is the trade-off for price certainty: you're protected from rises but also miss out on potential drops.

Early exit fee considerations

The exit fees associated with fixed deals can be a drawback if your circumstances change and you need to switch suppliers or tariffs before your contract ends. While you can switch penalty-free in the last 49 days, leaving earlier means incurring a fee, which could offset any potential savings from a new deal.

Key considerations before fixing your energy price

Before committing to a fixed energy deal, it's wise to assess your situation and research your options thoroughly.

Assessing your energy usage

Understanding your typical energy consumption is fundamental. Review your past bills to get an accurate picture of your electricity and gas usage in kWh. This will help you compare deals more effectively and estimate your future costs, ensuring the fixed deal you choose is suitable for your household's needs. For example, knowing your air source heat pump's efficiency can help you project future energy use.

Comparing deals across suppliers

The energy market is regulated by Ofgem, and suppliers must clearly communicate contract terms, including unit rates, standing charges, contract length, and any exit fees. It's crucial to compare available fixed energy deals from various suppliers. Look beyond just the unit rate; consider the standing charge, contract length, and any associated exit fees. Tools from Citizens Advice can help you get a better energy deal.

Understanding market forecasts

While no one can predict the future with absolute certainty, staying informed about energy market forecasts can help you make a more informed decision. If experts widely anticipate a significant drop in energy prices, it might be worth considering a shorter fixed term or a variable tariff. Conversely, if rises are expected, a longer fixed deal could offer greater protection.

What happens when your fixed deal ends?

The end of your fixed energy deal requires attention to avoid defaulting onto a more expensive tariff.

Automatic rollover to variable tariffs

If you do not actively switch at the end of your fixed term, your supplier will typically roll you onto their SVT. These tariffs are subject to the energy price cap and can often be more expensive than new fixed deals available in the market. This automatic rollover is a common pitfall, leading many consumers to pay more than necessary.

Switching to a new fixed deal

To avoid being rolled onto an SVT, it's advisable to start looking for a new fixed deal in the last 49 days of your current contract. This window allows you to switch without incurring early exit fees. By proactively researching and comparing deals, you can secure another fixed tariff that suits your needs, maintaining price predictability and control over your energy costs. Fuse's customer support team is available to assist customers with their energy plans, ensuring peace of mind throughout the process.

Managing your energy bills effectively is key to a stable household budget. Fuse Energy offers straightforward pricing and tools to help you understand and control your energy usage. Our support team is always on hand to help you navigate your options. Switching is quick and easy, allowing you to take charge of your energy costs. Click here to switch to Fuse Energy today. You can also learn more about our mission to make energy abundant by clicking here.