Fixed vs tracker vs variable: which energy tariff type suits you
Almost every UK energy tariff is one of three shapes: a standard variable rate, a fixed deal, or a tracker that follows the wholesale market. They price risk differently, so the right one depends on how much certainty you want and how closely you are willing to follow prices. Here is how each works.
Standard variable tariff (the default)
If you have never switched, or you let a fixed deal lapse, you are on the standard variable tariff (SVT). Its rates are limited by the Ofgem price cap, which is reset every three months. When the cap moves, your SVT rate moves with it: from 1 July 2026 the cap sets electricity at about 26.11p per kWh and gas at 7.33p per kWh for a typical direct-debit home. There is no exit fee, so you can leave any time, but you are fully exposed to each quarterly cap change.
Suits: people who want no commitment and are happy to track the cap, or who plan to switch soon.
Fixed tariff
A fixed tariff locks your unit rates and standing charge for a set term, usually 12 to 24 months. The rate does not change whatever the cap or the wholesale market does, which makes budgeting simple. The trade-offs: you usually pay a small premium for that certainty, and most fixed deals charge an exit fee (often £25 to £75 per fuel) if you leave early. If prices fall below your fixed rate, you are stuck paying more until the term ends or you pay to leave.
Suits: people who value predictable bills, or who expect prices to rise during the term.
Tracker tariff
A tracker follows the wholesale price of energy. The clearest example is Octopus Tracker, which updates its unit rate every day using a published formula: the wholesale gas and electricity price plus set allowances for network charges, government levies, taxes and the cost of supply. The standing charge does not move daily; it is set per region and reviewed periodically.
Because it follows the market, a tracker can fall well below the price cap when wholesale costs are low, and rise above it when the market is volatile. There is a safety limit: Octopus Tracker caps the daily unit rate at 100p per kWh for electricity and 30p per kWh for gas, far above the Ofgem cap, so the ceiling is high. Historically, wholesale prices sit below the capped retail rate most of the time, which is why tracker customers have often paid less over a full year, in exchange for accepting day-to-day movement. A smart meter and a tolerance for variable bills help.
Suits: engaged customers who can ride out price swings and want the lowest expected annual cost.
Side by side
| Standard variable | Fixed | Tracker | |
|---|---|---|---|
| Rate changes | Every 3 months (with the cap) | Never, for the term | Daily (with wholesale) |
| Certainty | Medium | High | Low |
| Exit fee | None | Usually | None |
| Best case | Tracks the cap down | Prices rise, you are protected | Cheapest over a typical year |
| Worst case | Cap rises sharply | Prices fall, you overpay | Volatile spike |
How to choose
Pick on temperament, not just price. If a surprise bill would cause real stress, a fix buys peace of mind. If you can absorb monthly swings and want the lowest likely cost, a tracker usually wins over a year. If you want flexibility with no lock-in, the capped SVT is the no-commitment middle ground. Whatever you choose, weigh the supplier as well as the tariff: a cheap rate from a supplier with poor service can cost you more in hassle. Compare suppliers on service, fairness and more in the supplier rankings, and model your own usage with the energy bill optimiser.