Fix your energy or stay on the price cap?

With the price cap rising to £1,723 from October and a further change due in January, plenty of households are asking whether to lock in a fixed deal. There is no single right answer. This guide gives you a method for comparing a fix against the cap, so you can decide based on your own usage and attitude to risk rather than on headlines.

What a fix actually gives you

A fixed tariff freezes your unit rates and standing charges for a set period, usually 12 months. Your bill can still go up or down with your usage. What it removes is the risk that Ofgem's quarterly cap moves against you.

The cap is reviewed every three months. The next level, for January to March 2027, will be announced in late November. Wholesale gas has been pushed up by the Middle East conflict, and the October rise was driven almost entirely by gas. That does not guarantee a January rise, but it makes one plausible.

Compare unit rates, not headlines

The most common mistake is comparing a fix's "typical household" annual figure against £1,723. Both numbers assume typical usage, which you probably do not have. Instead:

1. Find your annual consumption in kWh for each fuel. It is on your bill, your supplier's app, or your annual statement.
2. Note the cap unit rates and standing charges for your region and payment method from 1 October.
3. Take the fix's unit rates and standing charges.
4. For each fuel, multiply your kWh by the unit rate, add 365 times the daily standing charge, and compare totals.

A fix priced a little above the current cap can still be worth it if you expect the cap to rise. A fix well above the cap is a poor deal unless the fixed period runs through a rise you are fairly sure is coming. Comparison sites show today's fixed rates; the brief rule is to check one rather than rely on any single supplier's marketing.

Exit fees and the escape route

Most fixes carry an exit fee per fuel if you leave early. Some have none. If you fix and the cap then falls below your fixed rate, an exit fee is the cost of getting out. Look for it before you sign.

Two things soften the risk. Suppliers cannot charge exit fees in the last 49 days of a fix, so you can shop around before it ends. And if you have not fixed, you can move to a fix at any point, though the offers available will have already priced in whatever the wholesale market is doing.

What the VAT cut changes

The 0% VAT on electricity from 1 October to 31 March 2027 applies to fixed tariffs as well as the cap. Suppliers must pass it on. So a fix you compare today should show electricity rates without VAT for that period. It does not tip the balance either way, since both options get it.

Who should probably fix

A fix tends to suit you if:

• You value a known price for budgeting more than the chance of a cheaper cap later.
• You use a lot of gas, since gas is where the volatility sits.
• The fix's rates are at or only slightly above the October cap.

Staying on the cap tends to suit you if:

• The only fixes available are well above cap rates.
• You expect to move house or change supplier soon.
• You are a low user, where standing charges dominate and the unit rate matters less.

Watch out for

• Fixes sold on a "£X a year" figure with no unit rates shown. Ask for the rates.
• Fixes that bundle in a smart meter installation condition you cannot meet.
• Direct debit amounts set high at the start of a fix. Query them if your credit balance grows.
• Comparing a fix quoted in September against the July cap rather than the October one.

This is information only, not personal advice. The right choice depends on your usage, your region and how much certainty you want.