Should you switch to a fixed energy tariff in 2026?

War in the Middle East means energy bills are forecast to climb sharply in the summer.

The uncertainty is prompting some to consider whether to switch to a fixed price energy tariff to protect themselves from future bill hikes.

While the majority of households are on a standard tariff (around 33 million), around 21 million households now fix their energy bills.

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A fixed energy tariff can provide more security against future price hikes, allow you to pay a consistent unit rate for your energy, and could potentially save you some money.

On the other hand, you run the risk of fixing your energy bill at a higher level than you need to, meaning you could be forking out more for your energy than if you had stayed on the price cap.

In the wake of the Iran war, the fixed deals available on the market are becoming less competitive as suppliers hike rates in anticipation of increased prices from July onwards, when the new energy price cap will come in.

We look at how fixed tariffs work, and whether they are a better option than the price cap in the current climate.

How much does a fixed energy tariff cost?

A fixed energy tariff locks in your rate for a fixed period, usually a year, meaning you’re shielded from any changes in the wholesale cost of energy during that time.

A fixed energy tariff doesn’t fix what you pay, just the rate you are charged per unit of gas and electricity. So, like with the price cap, the more you use, the more you’ll have to pay.

Timed right, fixed deals can potentially save you hundreds of pounds a year compared to the price cap, if wholesale costs are higher than the level you fixed at.

But, conversely, there is a risk that energy prices will fall over the term of your fixed tariff, meaning you could pay more than someone on the price cap.

In any case, you’ll want to make sure you shop around for the best rate. You can do this through price comparison sites like MoneySuperMarket, Uswitch, Go.Compare and MoneySavingExpert.com.

There were plenty of fixed energy deals below the price cap before the war in the Middle East, but the conflict has led suppliers to hike prices as they anticipate energy prices to soar in the second half of the year.

There is now not a single fixed deal on the market that is below April’s price cap.

That means if you sign up to one you will lock yourself into paying higher rates than if you were on a standard variable tariff in the current April to June price cap period.

However, if the July price cap increases substantially, as most forecasters expect it will, these deals may give you better rates than if you were on a standard tariff.

Source: Uswitch, 31 March

Bear in mind, while these deals are widely available, there may be loyalty deals which are exclusive to existing customers. These can offer superior rates to those listed above. Check with your supplier to see if you can sign up for one of these tariffs.

Always read the fine print of any fixed tariff as well – some require you to have a smart meter, pay by a certain method or require you to sign up for other services to unlock the deal.

If you have an electric vehicle, there are specific tariffs available that could be cheaper than the deals mentioned above.

What’s happening with the energy price cap?

Millions of households saw their energy bills fall by 7% on 1 April, when Ofgem’s new energy price cap came in.

The average annual energy bill for a household on a dual-fuel tariff paying by direct debit is now £1,641 for the period between 1 April and 30 June – around £119 per year less than in the first quarter.

The energy price cap is based on typical use, so if you use more energy than an average household, you will likely pay more than this, and vice versa.

The cut came after the government removed certain environmental levies that pushed up household bills and urged suppliers to pass savings on to customers.

The reduction in bills will be enjoyed by households on both of the main tariff types – the standard variable tariff (SVT), which tracks the energy price cap and changes when the cap does, and the fixed rate tariff, which fixes your unit rate at a certain level for a set period of time.

However, this drop is likely to be short-lived as the war in Iran has led to surging wholesale energy costs.

Cornwall Insight, an energy consultancy well-regarded for the accuracy of their price cap forecasts, expects the July cap to reach £1,929 per year for the quarter – an increase of around £287 per year, or 18%.

While precise predictions differ, most forecasters agree that bills will rise to broadly this level in July if current market conditions continue.

Customers who have already locked into a fixed-rate tariff are not impacted by fluctuations in the energy price cap.

However, those who are shopping around for a new fixed tariff will find that prices are influenced by wider trends in the energy market – including how high or low the price cap is at the time.

Should you fix your energy tariff?

Whether or not you should fix your energy tariff is a difficult question to answer, especially in the current circumstances. It ultimately boils down to your appetite for risk.

Fixing offers you the certainty of knowing what you’ll pay per unit of gas and electricity rather than depending on the price cap, which can change suddenly as a result of external shocks.

This could be useful during times of turmoil in the energy markets as you are able to plan your energy budget in advance, knowing exactly what your unit rates will be for a year or more.

However, because all fixed deals are now at levels above the April price cap, fixing is a bigger risk than usual as, if the price cap is surprisingly low in July, you may be stuck paying a higher rate than you need to for a significant portion of time.

On the other hand, if you fix your energy now and prices reach much higher levels in July (as many forecasters expect) you may end up saving some money in the long run.

There is no one size fits all solution – what you should do depends on where you think energy prices will go in the future, and whether you have the risk tolerance to potentially lock yourself into paying higher rates than you need.

Nathan Blackler, expert at Go.Compare Energy, said: “Fixed tariffs offer protection against energy market volatility and give peace of mind, especially for households with tight budgets or those who prefer financial stability.

“However, it’s not a one-size-fits-all solution. Fixed deals often come with higher exit fees, meaning that if you want to end your contract early you’ll have to pay a fee.

“Some fixed tariffs may also have higher rates than standard variable tariffs, particularly if energy prices fall during your contract, so you could end up paying more than those on a variable plan.”

Ofgem energy supplier switching rules

If you opt to change providers, suppliers have to complete customer switches within five working days (six if you enter into a contract after 5pm). Failure to do so will mean they have to pay affected customers compensation of £40.

If the supplier you’re moving to fails to switch you across in time, complain to them directly. Should they fail to pay you the compensation you are due, you can escalate your complaint to the Energy Ombudsman, which can resolve the dispute.

Bear in mind, if you’re on a fixed tariff and switch providers, you may incur an early exit fee if you’re moving before the end of the deal term.