What is a Fixed Rate Tariff (UK): How They Work, Prices & Pros and Cons Quick answer
A fixed rate business energy tariff is a contract where the price you pay per kWh for gas or electricity stays the same for the entire contract term (usually 12 to 36 months). This protects businesses from rising wholesale energy prices and makes budgeting easier. However, if market prices fall during the contract period, your business will continue paying the agreed rate until the contract ends.
If you would like to read more information or learn more about the pricing of business energy, you can do so here .
Key Takeaways
A fixed tariff locks in your energy unit rate for the entire contract period.
Typical contracts last 1-3 years.
Businesses benefit from predictable bills and protection from price spikes.
If market prices drop, you won’t benefit from lower rates until the contract ends.
Early exit from a fixed contract may involve termination fees.
Many UK suppliers such as British Gas Business, EDF Energy and Octopus Energy offer fixed contracts for small and medium-sized businesses.
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Authored by: Ally Cox (Business Technology & B2B Services Specialist 10+ Years’ Experience)
Reviewed by: James Ward (Telecoms Specialist, 12+ Years Experience)
Last Updated: March 2026
Contents
What Is a Fixed-Rate Tariff?
Fixed Rate Tariff Comparison
Why Choose Fixed Rates?
How to Switch to a Fixed Rate Tariff
Pros of Fixed Rate Tariffs
Cons of Fixed Rate Tariffs
2026 Energy Market Outlook
📌 What Is a Fixed-Rate Tariff? A fixed-rate tariff is an energy contract where the price per unit (measured in pence per kilowatt-hour) remains constant throughout the contract duration, typically ranging from one to three years. what this means is that, regardless of market fluctuations, your energy unit price stays the same, providing a safeguard against unexpected price hikes.
Example of some Typical Fixed Business Energy Pricing Energy rates vary depending on your business size, usage, and location, and we’ve created a general example of UK business energy pricing.
Energy Type Typical Unit Rate Standing Charge
Electricity
22p – 35p per kWh
30p – 70p per day
12-36 months
Gas
5p – 11p per kWh
20p – 60p per day
12-36 months
Fixed Rate Tariff Comparison
Tariff Type Price Stability Contract Length Risk Level Best For
Fixed Rate
High
1-3 years
Low
Businesses wanting predictable bills
Variable Rate
Low
Flexible
Higher
Businesses comfortable with market risk
Deemed Tariff
Very low
No contract
High
Businesses without a contract
Out-of-Contract
Low
Rolling
High
Businesses whose contract has expired
Rollover Contract
Same as previous
Auto renewal
Medium
Businesses not actively reviewing contracts
Why Choose Fixed Rates? Fixed-rate tariffs are generally preferred for several reasons, the main one being that ith prices locked in for the duration of your contract, you can hedge against potential price increases due to market fluctuations, such as those caused by global events or economic conditions.
They also help to protect you against volatile energy prices, and help to simplify financial planning/forecasting. In addition, consistent energy costs make it easier to manage cash flow and plan for future expenses.
How to Switch to a Fixed Rate Tariff
Use an energy broker, comparison site (like ours) or review providers yourself. Contact your preferred providers to discuss your needs/contract terms you may have questions regarding. Review and sign your contract – take note of any cooling off periods etc.
Pros of Fixed Rate Tariffs
Locking in your energy rates shields your business from market volatility, ensuring consistent energy costs.
Predictable energy expenses simplify financial forecasting and cash flow management.
With energy prices subject to sudden increases due to geopolitical events or supply issues, a fixed-rate tariff offers peace of mind.
Cons of Fixed Rate Tariffs
If market prices fall, you won’t benefit from reduced rates during your contract term.
Exiting a fixed-rate contract prematurely may incur penalties. It’s crucial to understand the terms before committing.
Fixed-rate contracts require a commitment for a specified period. Ensure this aligns with your business’s future plans.
Important Considerations Your contract length
We suggest you carefully evaluate the contract term and consider your business’s long-term energy needs.
Early termination fees
We recommend you understand the implications of early contract termination to avoid unexpected costs.
Regular reviews
We suggest you periodically review your energy consumption and compare current rates to potential savings from other suppliers.
Energy Market Outlook Energy markets remain influenced by global supply, weather patterns, and geopolitical events, and according to the UK regulator Ofgem, market volatility following the energy crisis has encouraged many businesses to prioritise price certainty through fixed contracts.
While the household energy price cap does not apply to businesses, it often reflects broader trends in the UK energy market.
Read more
FAQs 1. What is a fixed rate business energy tariff?
A fixed rate tariff locks in your energy price per kWh for the duration of the contract, usually between 12 and 36 months.
2. Are fixed energy tariffs cheaper for businesses?
They are not always the cheapest option, but they protect businesses from sudden price increases in the energy market.
3. How long do fixed business energy contracts last?
Most contracts last 1 to 3 years, though some suppliers offer shorter or longer terms.
4. Can I leave a fixed energy contract early?
Yes, but most suppliers charge early termination fees if you leave before the contract ends.
5. What happens when a fixed energy contract ends?
If you take no action, your business may be moved onto out-of-contract or deemed rates, which are usually more expensive.
6. Is a fixed tariff better than a variable tariff?
It depends on your priorities. Fixed tariffs offer price stability, while variable tariffs offer flexibility and potential savings if prices fall.
7. How can businesses get the best fixed energy deal?
Compare suppliers, review energy usage, and secure a new contract before your current agreement expires.
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Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
