Fixed vs Variable Energy 2026: The £1,723 Cap Decision

Last updated: Thursday 29 October 2026

In short: If you are on a standard variable (default) tariff, Ofgem’s cap for 1 October to 31 December 2026 gives a typical dual-fuel home paying by Direct Debit a bill of £1,723 a year, about 4% more than the £1,663 for July to September (Ofgem, 26 August 2026). Compare fixed deals, but only fix if a quote beats what you would pay on the capped rates once standing charges, your regional rates and any exit fees are included.

What the October 2026 cap says

Ofgem’s Great Britain averages for Direct Debit customers for 1 October to 31 December 2026 (Ofgem unit rates and standing charges):

• Typical dual-fuel Direct Debit bill: £1,723 a year, up 4% from July to September.

• Electricity: 26.32p/kWh and 54.83p a day standing charge, with 0% VAT from 1 October 2026 to 30 June 2027 (HMRC Notice 701/19).

• Gas: 7.97p/kWh and 29.68p a day standing charge, with 5% VAT.

The typical bill assumes 2,500 kWh of electricity and 9,500 kWh of gas a year. Your bill will differ with your region, payment method, meter and usage. Prepay and standard credit have different cap levels (£1,678 and £1,861 a year for a typical home), so £1,723 may not be your figure.

Fixed or variable: a quick comparison

How to work it out

1. Find your last 12 months of kWh, or work out a yearly figure from your latest bill.

2. Work out the capped cost using your region’s rates from Ofgem’s tables or your supplier’s letter. The Great Britain averages above are a starting point.

3. Get at least three fixed dual-fuel quotes for the same usage.

4. If you are leaving a fixed deal early, add the exit fee.

5. Fix only if the total for the first year, including standing charges, is lower.

Some examples:

• Typical dual-fuel home: use £1,723 as the variable-tariff cost for comparison and check whether a fix comes in clearly below it at your real usage. A £40 saving that ignores a £75 exit fee is not a saving.

• High gas, low electricity use: the higher October gas unit rate and the 5% gas VAT matter more than the electricity VAT cut.

• Small flat with low use: standing charges make up much of the bill, so a fix with a low unit rate but a high standing charge can still cost more. Compare standing charges first.

What 0% VAT on electricity changes

From 1 October 2026 to 30 June 2027, household electricity carries 0% VAT, while gas keeps 5%. Your whole dual-fuel bill is not VAT-free, so check the VAT lines on your bill. Prepay and Economy 7 customers have separate cap rates; see Ofgem’s tables before using the £1,723 Direct Debit figure.

Standing charges are half the story

In October the average electricity standing charge fell slightly compared with July to September (57.19p to 54.83p a day) while the unit rate rose a little (26.11p to 26.32p/kWh). Gas standing charges and unit rates both rose. Low-use homes feel standing charges more; high-use family homes feel unit rates more. Split any quote into standing charges and unit costs before you choose.

Rates also vary by region, so a London Direct Debit rate is not the same as one in the Highlands. Use Ofgem’s regional tables or the rates on your bill.

Switching

A switch usually takes about five working days once the new supplier accepts you. You have a cooling-off period after agreeing a new contract. Do not cancel your Direct Debit with the old supplier until the new one confirms your start date, and take a meter reading on switch day.

Fixed deals often have exit fees, and leaving in the second month can wipe out the saving. If a better quote appears within the cooling-off period, you can usually cancel.

Smart meters and time-of-use tariffs

With a working smart meter, time-of-use tariffs can cost less than both a flat variable rate and a standard fix, but only if you can move use into the cheaper hours. See our guide to Economy 7 vs Octopus Go. You can also fix one fuel and keep the other on a time-of-use tariff. You do not need a smart meter to leave a variable tariff for a fixed deal.

Dual fuel or single fuel

Dual-fuel deals are not always cheaper. Price electricity-only and gas-only fixes as well as dual-fuel deals, and choose the lowest total. Two single-fuel contracts mean two sets of standing charges, so check both.

Extra help

If you are on the Priority Services Register, tell both suppliers when you switch. If you are repaying a debt, ask both suppliers how the repayments will continue. Check current Warm Home Discount eligibility on GOV.UK.

FAQ

What is the Ofgem price cap from October 2026?

£1,723 a year for a typical dual-fuel home paying by Direct Debit, for 1 October to 31 December 2026. That is about 4% more than for July to September (Ofgem, 26 August 2026).

Should I fix or stay on a variable tariff?

Fix if a quote costs less than the capped rates at your usage once standing charges and exit fees are included. Otherwise stay on the variable tariff and compare again when the next cap is announced on 25 November 2026.

What are the October 2026 unit rates?

The Great Britain Direct Debit averages are 26.32p/kWh and 54.83p a day for electricity, and 7.97p/kWh and 29.68p a day for gas. Rates vary by region.

Is household electricity VAT-free?

Yes, from 1 October 2026 to 30 June 2027, household electricity in Great Britain carries 0% VAT. Gas stays at 5%. Check the VAT lines on your bill.

Do I need a smart meter to fix?

No. You can leave a variable tariff for a fixed deal without a smart meter. You do need one for most time-of-use tariffs.

Does this apply to business energy?

No. Business energy has no price cap and uses business contracts. Compare business energy quotes separately.