📍Where Things Stand Right Now
Two things landed on the same day. The October–December price cap — confirmed on 26 August at £1,723 — took effect on 1 October, and VAT on domestic electricity fell from 5% to 0% until 31 March 2027. They pull in opposite directions, and the cap won.
The cap rises from £1,663 to £1,723 a year for a typical dual-fuel household paying by direct debit — +3.6%, about £60. Almost all of it is gas, up 8.7% to 7.97p/kWh; the electricity unit rate moved just 0.8% and the electricity standing charge fell 4.1%. Ofgem has said the rise would have been around 6% without the VAT cut, so the relief is real — it simply arrived as a smaller increase rather than a reduction.
Why the case for fixing just got stronger
October's 3.6% is about £5 a month — absorbable on its own. What changes the calculation is January: forecasts now put January at around £2,000–£2,115 — roughly 20% above October, or about £340 a year more for a typical household — and Martin Lewis expects somewhere between 15% and 30% depending on the Middle East. Octopus's 12M Fixed works out at about £1,817 a year: around £94 above October's cap, but around £240 below the January forecast. Fixing costs a little more for three months and should save from January if the forecasts hold. The price of changing your mind is the exit fee — £50 per fuel on Octopus's 12M fix.
🔒What Fixing Actually Does — and What It Doesn't
A fixed tariff locks your unit rates and standing charges for a set period, usually twelve months. That is the entire product. Everything else people assume about fixing is either a bonus or a misunderstanding:
- It does not fix your bill. This is the one that causes arguments with suppliers every winter. Your rates are fixed; your bill still rises when you use more energy, and you use far more in January than in July.
- It does not protect you from the price cap rising — because the cap never applied to you anyway. The cap governs default variable tariffs. Once you fix, Ofgem's quarterly announcements are simply news.
- It is not a bet you can only win. If the cap falls below your fixed rate, you keep paying the higher rate until the fix ends. Certainty cuts both ways, and that is the price of it.
- It does not stop VAT changes reaching you. Tax is applied on top of your tariff, so the October cut lands for fixed customers too. More on that below.
Put simply: fixing converts an unknown into a known. Whether that's worth paying for depends on how badly an unknown would hurt you — a genuine question about your finances, not a prediction about the gas market.
⚖️The Three Options Compared
Most coverage frames this as fixed versus variable. That's a false binary — there are three genuinely different shapes of tariff, and the third one is the one most people never consider:
The rows that change the decision are the exit fee ones. Exit fees are what make fixing a commitment rather than a preference, and they vary a lot: Octopus's 12M fix charges £50 per fuel, at the low end of the usual £25–£150 range, while some rivals charge three times that. Either way, no supplier can charge one if you leave in the last 49 days of the term.
Worth knowing on the middle column too: a standard variable tariff doesn't have to sit at the cap. The cap is a ceiling, and Octopus prices Flexible Octopus a little below it — so "staying variable" with a cheap supplier isn't the same decision as staying variable with an expensive one.
🧾The VAT Complication Nobody Mentions
A lot of people fixing this summer assume they'll miss out on the 0% VAT on electricity that arrived on 1 October. They don't. VAT is a tax on the supply of energy, not a component of your tariff — so when the rate changes, it changes for everyone. Your fixed unit rate excluding VAT stays locked; the VAT-inclusive amount you actually hand over for electricity falls.
Where it does get confusing is comparison. Fixed deals are typically advertised VAT-inclusive, so a quote given today for a tariff starting in September carries 5% VAT on electricity that will disappear a few weeks later. That makes an August quote look worse against an October one than it really is.
The date that should be in your diary: 1 April 2027
The electricity VAT cut is temporary and currently reverts to 5% on 1 April 2027. A twelve-month fix taken now runs past that date — so your electricity costs will step up partway through the fix through no fault of your supplier, and the market you return to at the end won't be the one you left. If it's extended in a future Budget, all the better; plan on the current law rather than the hoped-for one.
One more thing to hold loosely: forecasters have flagged that a further cut — taking VAT to zero on gas as well — could be announced in a future Budget, worth roughly a further £80 a year. That is speculation about a decision nobody has taken, and it is not a reason to delay a decision you'd otherwise make.
🔍How to Compare a Fix Properly
Comparison sites lead with an annual figure, and this year that figure is unusually treacherous. On 1 July 2026 Ofgem changed its assumption about how much energy a typical household uses — down from 2,700 to 2,500 kWh of electricity and from 11,500 to 9,500 kWh of gas. The same cap is now quoted as £1,663 where it would previously have been called £1,862. Nothing about the price changed; only the yardstick did.
Marketing material written before the change may still use the old basis. Compare two annual figures built on different assumptions and you will reach a confidently wrong conclusion. So compare these instead:
The four numbers that matter
- Electricity unit rate (p/kWh) — against today's cap rate of 26.32p (0% VAT)
- Gas unit rate (p/kWh) — against today's cap rate of 7.97p
- Both standing charges (p/day) — against 54.83p electricity and 29.68p gas
- The exit fee, per fuel — the number that decides whether a mistake is recoverable
Then express the fix as a percentage above or below the cap. That number is comparable across suppliers, survives changes to Ofgem's consumption assumptions, and tells you exactly what you're paying for certainty.
Then apply it to your own annual kWh, which is on your annual statement or in your supplier's app. A fix with a low unit rate and a high standing charge suits heavy users; the reverse suits light ones. The "typical household" in the adverts is a statistical artefact, and it's probably not you — the same logic that governs low standing charge tariffs.
👥Who Should Fix — and Who Shouldn't
If an unexpected £15 a month in January would mean something else goes unpaid, the value of knowing your rate exceeds the expected saving from staying flexible. That's a legitimate reason to fix even when the forecast says prices are flat, and it doesn't require you to have a view on wholesale gas. Landlords budgeting for a void period and anyone on a rigid monthly plan fall in the same category.
Staying variable is cheaper than a fix right now — October's cap is about £94 a year below Octopus's 12M Fixed — and variable tariffs have no exit fees. The risk is January: forecasts put the cap around 20% higher, which is roughly £340 a year more for a typical home, and Martin Lewis puts the range at 15% to 30%. If you can absorb that, or you expect wholesale prices to ease, variable keeps every door open. Just make sure it's a cheap supplier's variable tariff priced below the cap, not an expensive supplier charging you the full cap because you've never looked.
If you can move consumption — charging overnight, running the washing machine at 2pm, heating water when the wind is blowing — a tracker or half-hourly tariff will usually beat both a fix and the cap by a wider margin than the fix-versus-variable question is worth arguing about. With electricity VAT at 0% from October and gas staying at 5%, electricity-heavy households gain a second tailwind here.
Roughly speaking, every scenario above beats staying on a legacy default tariff with a supplier you last thought about years ago. Whatever Ofgem confirms for January in late November applies to that tariff in full, and no forecast changes the fact that you're paying the ceiling. If you take one action this month, make it this one.
🚪Why Exit Fees Decide This More Than Rates Do
Here's the part that gets least attention and matters most. The risk in fixing isn't that you pay slightly over the odds — it's that you're stuck paying slightly over the odds for a year while the market moves without you. Exit fees are what convert a small pricing error into a twelve-month one.
Typical exit fees run £25 to £150 per fuel, so leaving a dual-fuel fix early can cost up to around £300. That is often more than the difference you'd be escaping, which is precisely the point of the charge.
Octopus's 12M Fixed charges £50 per fuel — £100 for dual fuel — and its 18M Fixed charges £75 per fuel. Its variable tariffs (Flexible Octopus, Tracker, Agile, Go, Cosy, Flux) have no exit fees at all. Here's how that plays out against the current numbers for a typical household:
- October to December: the fix (about £1,817 a year) costs roughly £94 a year more than October's £1,723 cap, pro rata — a few pounds a month.
- From January: if the cap lands near the ~£2,060 forecast, the fix is running about £240 a year cheaper. Even at Cornwall Insight's lower £1,999 it's around £180 a year cheaper, and at the low end of Martin Lewis's range (+15%, about £1,981) around £160.
- If you change your mind: leaving costs £100 dual fuel. For that to be worth it, the variable price would need to fall far enough below your fix to recover £100 over the months you have left.
- In the last 49 days: Ofgem rules mean no exit fee at all, so you can line up your next deal without penalty.
A £50-per-fuel exit fee won't trap you if the market moves a long way, but it does mean fixing is a commitment rather than a free option. Check the exit fee alongside the unit rate on every fix you compare.
✅Verdict — Decide About Your Budget, Not the Gas Market
Verdict: With January forecast around 20% higher, fixing looks sensible for most gas-heated homes — at a small cost until then.
The cap rose to £1,723 on 1 October. Octopus's 12M Fixed, at about £1,817, costs a little more than that for the first three months. January is what changes the sum: forecasts put it around £2,060, roughly 20% higher, with Martin Lewis expecting 15% to 30% depending on the Middle East — and at that level the fix is about £240 a year cheaper. The £100 dual-fuel exit fee is the cost of changing your mind. Stay variable if you can absorb a January rise, go tracker or smart if you can shift when you use energy, and compare the whole market for the cheapest fix. Check the exit fee alongside the unit rate, remember the 0% electricity VAT reaches fixed customers too and reverts on 1 April 2027 — and don't let indecision leave you on a default tariff, which is the one choice that loses whatever happens.
Ofgem confirms the January cap in late November. If you want to wait for that, switching to Flexible Octopus now doesn't commit you — it has no exit fees, you take the £50 referral credit, and you can move onto a fix later (though fix prices may have moved by then). Octopus supplies 7.3 million UK households, has been Which? Recommended for 9 consecutive years and holds a 4.8/5 Trustpilot rating from 800,000+ reviews. Read our Octopus Fixed review if you've decided to lock in, or compare every Octopus tariff if you haven't.
To put your own numbers on the decision, the savings calculator runs your usage against the October cap, the illustrative Fixed rate and a January forecast in one view. If you're already with Octopus, the fix you'll be offered is Loyal Octopus, taken from your account; if you're switching in, it's Octopus 12M Fixed. Any exit fee on a Loyal offer is shown in its terms before you accept; Octopus 12M Fixed charges £50 per fuel.
Sources: Ofgem — energy price cap · MoneySavingExpert — energy price cap predictions. Figures last checked September 2026.