If you are on a standard variable tariff and watching the headlines about Middle East tensions and rising gas prices, you are probably asking the same question millions of UK households are asking right now: should I fix my energy tariff, or stay on the price-capped variable rate? There is a real answer, but it depends on how much short-term risk you can absorb and what you believe about where wholesale prices are heading. This page walks through both.
Right now: fix or stay variable? (as of May 2026)
This section is a snapshot of the UK energy market in mid-May 2026.
The current Ofgem price cap sits at £1,641 a year for a typical dual-fuel household paying by Direct Debit, covering 1 April to 30 June 2026. That was a 7% fall from the previous quarter, helped mainly by policy cost changes in the Autumn 2025 Budget rather than by wholesale prices easing.
The next cap, covering July to September, is what everyone is watching. Ofgem announces it on 27 May 2026. The current forecasts from Cornwall Insight, EDF and E.ON cluster between roughly £1,929 and £1,972 a year. That would be a rise of around 18%, or close to £300 on a typical bill. The reason is the ongoing conflict in the Middle East. US and Israeli strikes on Iran, retaliatory damage to Gulf oil and gas infrastructure, and disruption to shipping through the Strait of Hormuz (the route for roughly 20% of global oil and around a fifth of LNG trade) have pushed wholesale gas prices to levels not seen since 2023. Forecasts shift week to week. They could easily get worse if the situation deteriorates, and they could ease back somewhat if a credible de-escalation holds.
Suppliers have reacted exactly as you would expect. When the conflict escalated in early March, the number of fixed deals on the market roughly halved in a week, and the cheapest fix on offer jumped by over £100. Several large suppliers pulled fixed tariffs entirely. Most have since returned with new pricing, but the cheap, well-below-cap fixes that were available at the start of the year have largely gone. Some fixes are now priced close to or modestly above the current April cap. A handful sit slightly below it, often as loyalty deals for existing customers.
If you can find a fix priced at or near the current April cap, and especially if it is below £1,950 for typical use, the maths probably favours fixing for 12 months given the July forecast. If the only fixes available to you are priced well above £1,950, the case is weaker. Staying on the cap is a defensible choice if you can absorb a roughly £25–£30 a month rise in July and you are willing to bet on the situation easing later in the year. There is no single right answer here, and that is not a hedge. It genuinely depends on your budget and your view of the conflict.
What is a fixed energy tariff?
A fixed energy tariff locks in the unit rate you pay per kWh of gas and electricity, plus the daily standing charge, for the length of the contract. Most fixes run for 12 months. Some run for 24. Fixed tariffs are not capped by Ofgem, which means they can be priced above or below the prevailing price cap depending on what wholesale markets are doing when the supplier sets the rate.
What a fix does not do is fix your total bill. If you use more energy than last year, you pay more. The certainty is on the rate, not the spend. Most fixes also carry exit fees if you leave before the end of the term, though these typically fall away in the last 49 days of the contract.
What is a variable energy tariff?
A standard variable tariff, often called the SVT or default tariff, is what you sit on if you have never actively switched or if your last fix has ended. The unit rate and standing charge are capped by Ofgem and the cap is reset every three months. Variable rates can fall, and they can rise. The cap limits how high they can go in any given quarter, but it does not limit how much your annual bill ends up being. It is a ceiling on the rate, not a ceiling on the total.
Most UK households are currently on a variable tariff.
How the Ofgem price cap works
Ofgem reviews the price cap four times a year. Each cap is based on a wholesale assessment period that runs roughly two months before the cap takes effect. The July 2026 cap, for example, is calculated from wholesale gas and electricity prices observed between mid-February and mid-May 2026.
This lag is the most important thing to understand. The cap reflects what wholesale prices have done recently, not what they are doing today. If wholesale prices spike during an assessment period, the cap rises a few months later. If they fall, the cap eventually catches up. Fixed deals are priced off forward wholesale markets, so they react faster. That is why fixes and the cap can move out of line, and why one can briefly look like much better value than the other.
Fixed vs variable: the core trade-off
Fixed gives you certainty over the unit rate and standing charge. You know what you will pay per kWh for the next year, regardless of what oil tankers, Iranian missiles, or the next quarterly cap review do to the wider market. The trade-off is that you usually pay a premium for that certainty, and if the cap ends up falling during your fixed term, you lose out.
Variable gives you the opposite. You ride the market, capped at Ofgem’s quarterly ceiling. When prices are falling, that is great. When they are rising, it is painful, and there is no protection beyond the quarterly cap mechanism, which itself moves with wholesale prices on a lag.
For most of the period since 2022, fixed deals have been priced above the prevailing cap. That makes fixing a form of insurance, not an automatic saving. You are paying a known premium to avoid an unknown rise. Sometimes that premium is worth it. Sometimes it is not.
Fixed vs variable at a glance
| Fixed tariff | Variable tariff | |
|---|---|---|
| Unit rate | Stays the same for the contract term | Changes every 3 months with the Ofgem cap |
| Standing charge | Stays the same for the contract term | Changes every 3 months with the Ofgem cap |
| Covered by Ofgem price cap | No | Yes |
| Typical contract length | 12 or 24 months | Rolling, no fixed end date |
| Exit fees | Usually yes (typically £50–£75 per fuel) | Usually none |
| Best for | Households who want budget certainty above all | Households who think the cap will fall or stay flat |
| Worst for | Households who think the cap will fall | Households who cannot absorb a sudden cap rise |
When fixing usually makes sense
Fixing tends to make sense if budget certainty is the most important thing to you. It also makes sense if the available fix is priced at or below the current cap, which is uncommon but does happen, often as a loyalty deal. It makes sense if you have a genuine, well-grounded view that wholesale prices and the cap will rise materially over the next year. And it makes sense for households on tight budgets where a sudden cap rise would actually cause hardship. Some people just do not want to think about energy bills for 12 months. That is a legitimate reason to fix in its own right.
When staying on variable usually makes sense
Variable tends to make sense if you think the cap will fall or stay flat over the next year. It makes sense if you are unwilling to pay a premium for certainty, and if you are comfortable with month-to-month variation in what you pay. It also makes sense if there is any chance you will move home, change suppliers for service reasons, or otherwise want flexibility in the next 12 months, because exit fees can wipe out a decent chunk of any saving. And it makes sense if you want to keep optionality. Better fixes often appear when wholesale markets calm down, and you cannot take them if you are already locked into a worse one.
Exit fees, contract length and the small print
Exit fees on fixed deals usually sit between £50 and £75 per fuel, so leaving a dual-fuel fix early can cost you £100 to £150. Those fees disappear in the final 49 days of the contract, which is a regulatory rule. That window is when you can switch without penalty.
At the end of a fix, your supplier rolls you onto their standard variable tariff by default unless you actively choose another fix. A 12-month fix gives you flexibility to reassess in a year. A 24-month fix gives you longer certainty but locks in your view of the market for twice as long. In a volatile environment, the case for 12 months over 24 gets stronger, because the further out you look the less anyone, including the analysts, can credibly forecast.
A simple decision framework
Run through these four questions before you decide.
How much would a 20% rise in the cap actually hurt? If the answer is “I would notice but I would cope”, you can afford to take some variable risk. If the answer is “it would mean cutting back on essentials”, certainty is worth paying for.
Is the available fix priced above or below the current cap? Compare like for like, dual fuel, Direct Debit, your region. If the fix is below the cap, the maths is straightforward. If it is materially above, you are buying insurance and the question is whether the insurance is worth the premium.
How long is the fix and how does that match your plans? If there is any realistic chance you will move, change circumstances, or want to switch within the term, exit fees matter.
What does the expert consensus say about the cap’s direction? Forecasts vary across Cornwall Insight, EDF, E.ON and others, but if they all point in the same direction, that is a stronger signal than any single source. Treat anything beyond six months out as a rough guide, not a fact.
FAQ
Should I fix my energy tariff right now?
It depends. In mid-May 2026, with the July cap forecast to rise around 18%, a fix priced at or near the current April cap is likely to save money over 12 months on central forecasts. A fix priced significantly above that probably is not. The honest answer changes as wholesale markets move, so check the live picture before deciding.
Is fixed or variable cheaper in the UK?
There is no permanent answer. Across most of the period since 2022, variable has been cheaper on average because fixed deals carried a risk premium. There have been windows where the opposite was true. Right now, with the July cap forecast to rise, the cheapest fixes may end up cheaper than variable over the next 12 months, but that depends on what happens in the Middle East and to wholesale markets over the rest of the year.
Does the Ofgem price cap apply to fixed tariffs?
No. The cap only applies to standard variable tariffs and default tariffs. Fixed deals sit outside it. That can work in your favour (if you fix below the cap) or against you (if the cap falls below your fixed rate).
What happens at the end of a fixed energy tariff?
Your supplier moves you onto their standard variable tariff by default, which is covered by the price cap. You can switch to a new fix at any point in the final 49 days of your contract without paying exit fees.
Are there exit fees on fixed energy tariffs?
Usually, yes. They typically range from £50 to £75 per fuel. A few fixes are sold with no exit fees, but they are the exception. Always check the contract terms.
Can I switch from variable to fixed at any time?
Yes. If you are on a standard variable tariff there are no exit fees, so you can move to a fix whenever you want and whenever the deals look attractive.
Will the Ofgem price cap go up or down at the next review?
The next cap is announced on 27 May 2026 and runs from 1 July. As of mid-May, Cornwall Insight, EDF and E.ON all forecast a rise, broadly in the range of £1,929 to £1,972 a year for typical use, up from £1,641. Final numbers depend on wholesale prices through the rest of the assessment period.
How does the Middle East conflict affect UK energy prices?
The UK imports a large share of its gas, and electricity wholesale prices are still tightly linked to gas. Disruption to oil and LNG flows through the Strait of Hormuz tightens global supply, raises wholesale prices, and feeds through to the UK price cap with a lag of a couple of months. That is why a conflict thousands of miles away can move your energy bill.
Is it worth fixing for two years instead of one?
It depends on how confident you are about the next 24 months versus the next 12. In a volatile environment, most people lean toward 12 months because forecasts become unreliable beyond about six months. A 24-month fix is only worth it if you have a strong reason to believe the cap will sit above the fix for the full term.
What is the cheapest way to pay for energy right now?
Direct Debit is generally the cheapest payment method under the price cap. The cheapest tariff depends on your region and usage, so a like-for-like comparison is more useful than a national average.