Energy tariffs explained

Find out the difference between energy tariffs to help you understand which is best for you.
Sarah IngramsPrincipal researcher & writer
Comparing energy tariffs

Competitively priced gas and electricity tariffs are few and far between, but it's worth keeping a look out to see if you could save money.

Energy prices are still quite high thanks to high wholesale energy prices, though they've been falling in recent months.

This means that companies are able to offer fixed deals in line with the price cap, or slightly cheaper. At the moment you'll still be paying far more than you were a couple of years ago but prices are expected to continue to fall this summer.

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. Find out 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, 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. 

Several energy firms are now selling fixed tariffs again. Some are also offering other fixed deals only to their existing customers. Check what's 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. 

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. The price cap will drop in April 2024 and is predicted to drop again in July.

Which energy tariffs are cheaper? 

Few energy deals which will save you money in the long-term are available at the moment - either fixed or variable. 

If you're looking to switch supplier, there is often little difference between their price-capped variable tariff and fixed-term tariff available to new customers.

Some firms are offering exclusive deals to their existing customers at better rates. 

Suppliers previously offered a range of cheap one-year fixed deals, but when wholesale energy prices rocketed in autumn 2021, these vanished.

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.


Consult our guide to see how the energy price cap works and whether it applies to your bills: What is the energy price cap?


Dual fuel tariffs

Gas and electricity meters

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

Woman sitting by the window looking at her energy account on a tablet

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. 

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.

This tariff is a good option if: you find pre-paying is an easier way to manage your bills. Find out whether a prepayment meter is right for you. From April 2024 prepayment price-capped tariffs will be the cheapest.

You should watch out for: more limited tariff options. There are currently very few suppliers selling fixed deals for prepayment customers.

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. 

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.

In the past, you needed meters that counted your electricity use using two different dials, one for peak and one for off-peak times. 

Smart meters can do the same thing remotely, so some energy companies are starting to offer time of use tariffs to smart meter customers. 

Whether they are right for you will depend on how much electricity you are able to use at off-peak times. 

Not all energy suppliers offer them. They're not usually available through price comparison websites.

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.

Economy 7 and Economy 10

  • Economy 7 gives seven hours of cheaper electricity overnight 
  • Economy 10 gives 10 hours of cheaper electricity, typically seven overnight and three during the day.

If you have a time of use tariff that uses an Economy 10 meter, check that your meter is reading the correct time. We've had reports in the past of meters being set to the wrong time and therefore recording usage incorrectly.

Smart time of use tariffs

Some providers, including British Gas, Octopus Energy and Ovo Energy have tariffs with cheaper rates for electricity used at less popular times of day. 

Several enerfy firms offer smart tariffs for electric vehicle owners which mean you can charge your EV cheaply overnight.

How to save with a time of use tariff

Try to use electricity during the cheaper hours, as much as you can. You could:

  • heat your home with electric storage heaters
  • use a timer to heat your water during cheap hours
  • charge an electric vehicle during cheaper hours
  • run some appliances overnight (though for safety reasons, you shouldn't leave your washing machine, dishwasher or tumble dryer running when you're asleep).

If you're using less than 30% of your electricity at the cheaper rate, you might be better off on a single-rate electricity tariff (one that charges the same rates regardless of when you use electricity.

Energy companies with more than 50,000 customers must make their single-rate tariffs available to customers with restricted meters (ones that allow you to be charged a lower rate at off-peak times). This includes Economy 10 meters and white meters. 

If you think you’d be better off on a single-rate tariff, and will need a new meter, most big suppliers won't charge you to install it.

Some suppliers will just add your two readings together rather than change your meter.

Contact your supplier if you would like to switch away from your time of use tariff to a single rate.