When you compare electricity plans, the first choice you face is not which retailer to pick. It is whether you want your rates locked in or free to move. A fixed rate plan holds your usage rate and daily supply charge steady for a set period, usually 12 months. A variable rate plan lets the retailer change your rates with notice, which means your bill can go up or down during the year.
The short answer: neither one is cheaper by nature. A fixed rate is worth it when the plan’s whole-year cost is close to the cheapest variable plan and you value knowing your bill will not rise. A variable plan is usually the better pick when it starts noticeably cheaper, because the gap between the two has shrunk since new rules took effect on 1 July 2026. The right way to choose is to cost both on a full year of your own usage, not on the headline rate alone. You can compare every generally available plan in your area on the government’s Energy Made Easy website.
What is a fixed rate electricity plan?
A fixed rate plan locks in the price you pay for each kilowatt-hour (kWh) of electricity, and usually the daily supply charge too, for a set period. In most cases that period is 12 months, though some plans run for up to two years.
While the fixed period lasts, your rates cannot go up, even if wholesale prices rise or the regulator lifts the reference price. That makes budgeting simple: if your usage stays about the same, your bill stays about the same.
There are two catches. First, if market prices fall during your fixed period, you will not benefit until the term ends. Second, fixed plans often start at a higher rate than the cheapest variable plans, because the retailer builds in a margin for the risk it is taking. You are paying for certainty, and that certainty has a price.
What is a variable rate electricity plan?
A variable rate plan is the normal kind of plan in this country. Most households are on one. Your retailer can change the usage rate and supply charge during the contract, as long as it gives you proper notice.
Variable plans often start cheaper than fixed plans. The trade-off is that your bill can rise when the retailer puts its prices up. Until recently, those rises could come more than once a year. That changed on 1 July 2026, and the change matters a lot for this comparison, as explained below.
Variable plans also tend to be more flexible. Most market plans no longer charge exit fees, so you can usually switch to a cheaper plan whenever you find one. Check the terms before you sign, because a few plans still have them.
Fixed vs variable at a glance
| Fixed rate plan | Variable rate plan | |
|---|---|---|
| Usage rate | Locked for the fixed period, usually 12 months | Can change, with notice |
| Daily supply charge | Usually locked too, but check the plan terms | Can change, with notice |
| Starting price | Often higher than the cheapest variable plan | Often lower to start with |
| If market prices fall | You miss out until the term ends | You can benefit, or switch to a cheaper plan |
| If market prices rise | You are protected until the term ends | Your bill rises at the next price change |
| How often prices can rise | Not during the fixed period | At most once every 12 months since 1 July 2026 |
| Exit fees | Possible on some plans, check before signing | Most market plans have none |
| When the term ends | You may be moved to a variable plan or a standing offer | The plan keeps rolling unless you switch |
What changed on 1 July 2026
New rules made by the Australian Energy Market Commission took effect on 1 July 2026, and they changed what a variable plan really means.
Under the new rules, a retailer can raise prices on a market plan at most once every 12 months. For most customers that rise will land in July, when the regulator’s annual reference prices are updated. For a plan with a fixed-price period, prices cannot rise before the contract anniversary, and the retailer must give 20 business days’ notice. Cuts to feed-in tariffs are limited in the same way.
The rules apply in New South Wales, Queensland, South Australia, the ACT and Tasmania. Victoria already had a similar once-a-year limit under its own rules.
Two other protections came in at the same time. When the benefits on your plan change or end, your retailer cannot charge you more than its standing offer price. And your retailer must give you at least five business days’ notice before the prices on a market offer change, showing the old and new prices and the date they take effect.
In practice, a variable plan today behaves more like “fixed for up to a year, then reset in July”. The mid-year surprises are largely gone. What still matters is the price you start on, and what happens in July.
Three things people mean by “fixed”
This is where most people get caught out. The word “fixed” can mean three different things, and only one of them protects you from a price rise.
Fixed price
The rates themselves are locked for a set period. This is the only kind that protects you from a price rise while it lasts. If a plan says “fixed rates for 12 months”, this is what it should mean, but read the fine print to be sure.
Fixed term
The contract lasts a set time, for example 12 months. That alone does not mean the prices are fixed. A fixed-term plan can still have variable rates that change during the term. Always check whether the plan says prices can change during the term.
Fixed benefit
A discount, credit or other benefit lasts a set period, often 12 months, while the underlying rates can still change. When the benefit ends, your bill goes up. Since 1 July 2026 your retailer cannot charge you more than its standing offer price when this happens, but the standing offer is usually one of the most expensive rates around, so the bill can still jump.
Before you sign anything, ask for the plan’s Energy Price Fact Sheet. It is a standard document every retailer must publish for each plan, and it states plainly whether the rates are fixed and for how long.
How to compare them fairly
The only fair way to compare a fixed and a variable plan is to cost both on a full year of your own usage, including the daily supply charge and, if you have solar, the feed-in tariff. A cheap headline rate with a high supply charge can cost more than a slightly dearer rate with a low one.
Here is a simple way to do the maths. The regulator’s reference price for the Ausgrid network area is $1,899 a year for a household using 3,900 kWh. At that level of usage, every 1c per kWh is worth $39 a year. So if a fixed plan costs 3c per kWh more than the cheapest variable plan, you are paying about $117 a year extra for the certainty. That is the price of the insurance. Whether it is worth it depends on how much you value a bill that cannot rise.
For the variable plan, assume the price you see today applies until next July, because that is when the next rise can come. Then compare the whole-year totals. A small difference is the price of certainty. A large one is the price of a bad deal.
Also note when each plan’s price can next change, and when any discount or benefit ends, and put both dates in your calendar. That is the moment to compare again.
To see what variable plans actually cost right now, the cheapest market offers in the Ausgrid area this week sit around 26 to 27c per kWh, with some plans up near 31c. If the fixed plan you are looking at is much dearer than that, the certainty is costing you real money. For a closer look at the plans on offer, read our guide to the best electricity plans for families.
Which is better for you?
There is no single right answer. It depends on your household and how you feel about risk.
Choose a fixed rate if you:
- Want to know exactly what your bill will be for the next 12 months
- Are on a tight budget and a surprise rise would hurt
- Expect prices to rise at the next July reset
- Found a fixed plan whose whole-year cost is close to the cheapest variable plan
Choose a variable rate if you:
- Want the lowest price available today
- Are happy to check your plan once or twice a year and switch when something cheaper appears
- Think prices are more likely to fall than rise
- Want the freedom to leave at any time without an exit fee
One more thing to weigh is your tariff type. If you are on a time-of-use tariff, the fixed-versus-variable question sits on top of the peak and off-peak rates, and shifting your usage to cheaper hours can matter more than locking the rate. Our guide to when off-peak electricity applies explains the time windows in each state.
Watch out for these traps
The end-of-term rollover. When a fixed-price period ends, your retailer may move you to a variable market offer or a standing offer unless you choose a new plan. Standing offers are set by the regulator to protect customers, but they are generally more expensive than market offers. Put the end date in your calendar and compare before it arrives.
Exit fees. Most market plans no longer charge them, but some fixed plans still do. If prices fall and a better plan appears, an exit fee can wipe out the saving from switching. Read the terms before you sign.
The fixed-term trap. As explained above, a fixed term is not the same as fixed prices. If the plan does not say the rates are locked, assume they can change.
Only one part fixed. Some plans fix the usage rate but not the daily supply charge, or the other way around. Check both figures on the Energy Price Fact Sheet.
Frequently asked questions
Are fixed electricity rates worth it?
Only if the fixed plan’s whole-year cost on your usage is close to the cheapest variable plan. A fixed price is insurance against a rise. It is not automatically cheaper.
How often can my retailer change my prices?
Since 1 July 2026, under the national rules, a price rise on a market plan can happen at most once every 12 months, usually in July. Plans with a fixed-price period cannot rise before the contract anniversary. Victoria has a similar limit.
Is a fixed-term contract the same as fixed prices?
No. A fixed term means the contract lasts a set time. Only a fixed-price plan locks the rates. Read whether the plan says prices can change during the term.
What happens when my fixed price ends?
The plan usually moves to the retailer’s current prices, which may be higher. Your retailer must tell you before it happens. That is the moment to compare.
Can my retailer cut my feed-in tariff on a variable plan?
Yes, but since 1 July 2026 cuts to feed-in tariffs are limited to once every 12 months, the same as price rises.
Do fixed-price plans have exit fees?
Most market plans no longer charge exit fees, but check the terms of any fixed plan before you sign.
Where are fixed rate electricity plans available?
Fixed rate plans are offered in New South Wales, Victoria, South East Queensland, South Australia and the ACT, where energy markets are deregulated and customers can choose between retailers. Not every retailer offers them, so compare plans using your postcode.
This article is general information only, not financial advice. Energy prices, rules and plan terms change, so always confirm the details on the plan’s Energy Price Fact Sheet or with your retailer before you switch.
