Fixed rate contract

What it is

With a fixed rate contract, the supplier agrees the unit rate and standing charge for a set term, commonly one to three years. You know the price for the period, which helps budgeting.

Where you will see it

In the Principal Terms and the contract summary. Check whether the fix covers the whole price or only the energy part. On a pass-through deal, some network and policy charges can still change. On a non-pass-through deal they are included in the fixed price.

What is not fixed

• VAT and the climate change levy are taxes and follow the law. CCL rises from 0.801p/kWh to 0.827p/kWh on 1 April 2027.
• Your total bill still depends on how much you use.
• There is no cooling-off period once you agree, even by phone, so check before you commit.

Why it matters

A fix protects you if prices rise, but not if they fall, and leaving early can mean fees. Know the end date and diarise the renewal window; if you do nothing, the contract may roll over; for a microbusiness Ofgem rules limit a rollover to 12 months. See rollover contracts.

Worked example

A pub signs a 24-month fix at 27p/kWh and 60p/day, using 30,000 kWh a year.

• Units: 30,000 × £0.27 = £8,100
• Standing charge: 0.60 × 365 = £219
• Annual total before CCL and VAT: £8,319

If market rates rose to 32p in the second year, the pub would have avoided 30,000 × £0.05 = £1,500 of extra cost.

Related terms

See fixed vs flexible and can a supplier change my fixed price.