Fixed price electricity vs variable rate plans explained

A fixed price electricity plan locks in your rates for a set period, so your retailer can't increase them until that period ends. A variable rate plan lets your retailer change your rates, usually once a year.

Until recently, retailers on variable plans could raise prices several times a year. From 1 July 2026, new national rules limit price increases on every market plan to once in 12 months. Victoria has had a similar rule in place since 2020. 

This guide explains what fixed and variable plans mean now, what a fixed price actually protects you from, and how to work out which type suits your household.

Quick facts

• A fixed price plan locks your usage rates and daily supply charge for a set period, which is usually shorter than or equal to the contract term.
• A fixed term contract is not the same as a fixed price contract, because a fixed term only sets how long the contract lasts.
• From 1 July 2026, retailers in NSW, Queensland, South Australia, the ACT and Tasmania can increase prices on market plans only once every 12 months, and for most customers that increase happens in July.
• In Victoria, retailers have been limited to one price increase a year since July 2020, usually on 1 August.
• The rules limit how often prices can rise, not how much they can rise by, so a fixed price plan still protects you from the size of the next annual increase.
• Price decreases can still happen at any time on both fixed and variable plans.

What is a fixed price electricity plan?

A fixed price electricity plan is a market plan where your retailer agrees not to increase your rates for a set period after you sign up. During that period, your usage rate (cents per kWh) and your daily supply charge stay the same.

Retailers market these plans under different names, and Energy Made Easy, the Australian Energy Regulator's comparison site, lists "fixed price", "price guarantee" and "price freeze" as common labels for plans where the price is fixed for a certain period.

The fixed price period is often 12 months, but it can be shorter or longer, and it doesn't always match the length of the contract. A plan might have a two-year contract term with prices fixed only for the first year, for example.

Some fixed price plans also lock in your solar feed-in tariff. Check your own plan's documents to see whether your feed-in tariff is covered, since this varies between retailers.

What is a variable rate electricity plan?

A variable rate plan is a market plan where your retailer can change your rates during the contract. Most market plans are variable. Your rates still only change when the retailer decides to change them, and it must give you notice before an increase takes effect.

Variable rate plans are often ongoing contracts with no end date. You can switch at any time if you're on an ongoing market retail contract, which makes variable plans the more flexible option if you expect to move house or want to change plans as better offers appear.

A variable rate plan is different from a plan linked to wholesale electricity prices. A small number of retailers offer plans where your rates follow the wholesale spot price and can change every few minutes. Those plans are a separate product and sit outside the once-a-year limit described below.

Fixed term vs fixed price: the difference that catches people out

A fixed term and a fixed price are two different things, and many plans have one without the other.

• Fixed term means the contract has an end date. It says nothing about whether your prices can change during the contract.
• Fixed price means your rates can't increase for a set period.
• Benefit period means a discount or credit applies for a set time, such as a 12-month pay-on-time discount. When it ends, your rates can go up even if your base prices haven't changed.

If a retailer describes a plan as a "12-month fixed contract", check the plan documents to see whether it's the term, the price or the discount that's fixed. The answer changes what you're protected from.

How the July 2026 rule changed fixed vs variable plans

On 19 June 2025, the Australian Energy Market Commission (AEMC) made a final rule to restrict price increases on market retail contracts, which took effect on 1 July 2026. It applies to new and existing contracts in the states and territories covered by the National Energy Retail Rules: NSW, Queensland, South Australia, the ACT and Tasmania.

Under the AEMC's final determination, retailers can increase prices only once every 12 months, and the timing depends on the type of plan:

• On a variable plan, an increase can happen once within the month of July each year. This applies to the majority of customers.
• On a plan with a fixed price period, an increase can happen no earlier than the anniversary of the contract and no sooner than 12 months after the previous increase.

The same determination limits decreases to energy payments, such as solar feed-in tariffs, to once every 12 months. Price decreases and feed-in tariff increases can happen at any time, and retailers must tell you about them no later than your next bill.

Notice periods also differ by plan type. For increases that happen in July, retailers must give you at least five business days' notice. For plans with a fixed price period, the AEMC requires 20 business days' notice before an increase. Retailers must also tell you before you sign up when prices may change under the contract.

There are two exceptions. The rule doesn't restrict price changes that result from your distributor reassigning you to a different network tariff, and it doesn't apply to plans where your prices are linked to the wholesale spot price.

Victoria's rules

Victoria isn't covered by the national rule, but it already had a similar protection. The Essential Services Commission (ESC) introduced rules on 1 July 2020 that limit retailers to one price increase a year. For most customers, that increase happens on a set date one month after network prices change, usually 1 August. Customers on fixed price contracts only see an increase on the anniversary of their initial fixed price period expiring, and retailers can decrease prices at any time.

What this means for the fixed vs variable decision

Before these rules, a variable plan could rise several times in a year, so a fixed price was the only reliable way to avoid surprise increases. Now, both plan types can rise at most once a year. The difference is when that increase can happen.

Take a household that signs up in March. On a variable plan in NSW, prices could rise in July, four months after signing. On a 12-month fixed price plan, prices can't rise until the contract anniversary in March the following year. In Victoria, the variable plan could rise on 1 August instead.

A fixed price plan now buys you time before your first increase rather than protection from frequent increases. How much that's worth depends on when you sign up and which way prices are heading.

The rules also cap how often prices can rise, not by how much. The AEMC's determination restricts the number and timing of increases but doesn't limit the size of an annual increase, so a fixed price period still shields you from whatever the next annual change turns out to be.

What happens when a fixed price period or benefit ends

When your fixed price period ends, your retailer can increase your rates, with notice. If your contract also has a fixed term, your retailer must contact you before it ends. The AER notes that retailers must notify customers on fixed-term market contracts between 40 and 20 business days before the contract end date.

If you don't choose a new plan, EWOSA's contracts guide explains that you'll usually be moved to a comparable plan, which may be the retailer's standing offer.

The July 2026 rule added a protection for plans with discounts or credits that expire. Under the AEMC's final determination, once a plan's benefits change or expire, your retailer can't charge you more than its standing offer price. If your post-discount rates are already below the standing offer, nothing changes.

In Victoria, the ESC's 2025 energy consumer reforms require benefits on contracts entered into since 1 July 2020 that haven't yet expired to be maintained.

The standing offer is a ceiling, not a good deal. Standing offers usually cost more than market plans, so the end of a fixed price period or benefit is the best time to compare what else is available.

Exit fees on fixed price plans

Some fixed term plans charge an exit fee if you leave before the contract ends. Under the national rules, from 1 July 2026, retailers can't charge fees, including exit fees, to vulnerable customers, and any fees for other customers must be limited to reasonable costs.

In Victoria, the state government banned exit fees on fixed-term electricity and gas plans where the retailer increases the price during the term.

Every new energy contract also comes with a 10-day cooling-off period, during which you can cancel without paying an exit fee. Check the exit fee in the plan documents before you sign, especially if there's a chance you'll move house during the fixed term.

Fixed price vs variable rate plans at a glance

Which type of plan suits your household?

A fixed price plan is worth considering if you want certainty about your rates for the next 12 months or more, you expect to stay at your current address for the full fixed price period, and you'd rather not deal with a July price change soon after signing up.

A variable rate plan is usually the better fit if you're likely to move house, you want the option to switch whenever a better offer appears, or you'd like price decreases passed on as soon as your retailer makes them.

Price is the other factor. When the AEMC examined fixed and variable contracts in 2014, it found that fixed price contracts were generally more expensive because the retailer carries the risk of costs rising during the fixed period. That analysis predates the July 2026 rule, so compare the actual rates on the plans available to you rather than assuming either type is cheaper.

The most reliable way to compare is to work out the estimated annual cost of each plan for your own usage, including the daily supply charge. Our guide to the electricity daily supply charge explains how the fixed and usage parts of a plan trade off, and our electricity cost per kWh guide lists the current regulated rates for every network as a benchmark.

How to check whether a plan's price is fixed before you sign

Every retailer must publish a plan information document for each plan, which shows the prices, fees, contract length and any discounts and their conditions. Before you sign up, check the following.

1. Look for a fixed price period, not just a contract term. The document should state how long prices are fixed for. If it only states a contract length, assume the price is variable.
2. Compare the fixed price period with the contract term. If prices are fixed for 12 months on a 24-month contract, you can face an increase in the second year while still being bound by the contract.
3. Check what's included. Confirm whether the daily supply charge, usage rates and solar feed-in tariff are all fixed, or only some of them.
4. Check the exit fee. Note the amount and whether it reduces over time.
5. Note the key dates. Write down when the fixed price period ends and when any benefit period ends, so you can compare plans before your rates change.

To read the rates and charges on your current bill, see our guide to understanding your electricity bill. If you have solar, our solar feed-in tariffs guide covers how to compare export rates alongside your usage costs.

If you'd rather not work through plan documents yourself, the Utility Club team can compare the fixed and variable plans available at your address and explain what each one would cost for your usage. Compare plans now or call 1300 317 598.

Photo by Jason Richard on Unsplash