Variable Rate Tariff

Key takeaways

A variable rate tariff means the supplier can change the unit rate (and sometimes the standing charge) during the contract.

For businesses, “variable” often overlaps with default or out-of-contract pricing, and it’s usually less predictable than fixed deals.

If your contract ends and you don’t agree a new one, you may be moved onto a deemed arrangement.

What is a variable rate tariff?

A variable tariff is one where the price can move over time rather than being locked.

In domestic energy, this is often called a standard variable tariff.
In business energy, the important point is that variable pricing can change, so you need to understand:

1. how frequently it can change
2. what triggers changes
3. whether it’s a negotiated variable deal or simply a default rate

Business warning: contract end can push you onto deemed pricing

Ofgem’s business contract guidance explains that if your contract expires and you haven’t agreed what happens next, suppliers can move you onto a deemed contract.

That’s why “variable” sometimes becomes “surprisingly expensive” without you actively choosing it.

Sources

1. Ofgem: Set up a business energy contract (what happens at contract end; deemed contracts)
2. Citizens Advice: Standard variable tariff explanation (how variable tariffs work in principle)
3. British Gas: Fixed vs variable tariffs (plain-English definition of variable pricing)