Octopus Energy Tariffs Explained: Fixed, Flexible and Smart

How any UK energy tariff is actually built

Whatever the name on a tariff, every domestic gas and electricity bill in Great Britain is built from the same few components. Understanding them makes any quote easier to read, and makes it obvious why no responsible guide should publish specific current figures.

Unit rate: The price per kilowatt-hour (kWh) you actually consume, in pence. Electricity and gas each have their own unit rate, and rates differ by region and payment method.
Standing charge: A fixed daily amount charged regardless of how much energy you use, covering the cost of keeping you connected to the network and supplied.
VAT: Domestic energy is charged VAT at the reduced rate of 5%, already included in the rates shown on a quote — you should never see it added separately for a home supply.
Annual estimate: Unit rate × your estimated annual kWh, plus standing charge × 365, summed across gas and electricity. It is a projection based on assumed usage, not a guaranteed bill.

Because the annual estimate depends entirely on the kWh figure fed into it, two households on an identical tariff can be quoted very different annual costs. Always check that a quote is using your real historic usage — from a recent bill or your smart meter's in-home display — rather than a generic industry-average estimate, which can be significantly higher or lower than your actual pattern.

What the price cap does and does not do

Ofgem's energy price cap sets a maximum unit rate and standing charge that suppliers can charge on default, flexible tariffs, and it is reviewed roughly every three months. It is frequently misunderstood, so it is worth being precise about its limits.

It caps the rate per unit and the standing charge, not your total bill — use more energy and you still pay more
It applies to flexible/default tariffs; fixed tariffs can sit above or below the capped level depending on market conditions when you fix
It is set separately for Direct Debit, standard credit and prepayment payment methods, and the levels are not identical
It does not apply to every product feature — for example, time-of-use windows and export rates are set by the supplier within the wider regulatory framework, not fixed at a single capped number

Why this page has no rates in it

The price cap changes every quarter and named tariff rates change even more often. Any specific pence-per-kWh figure printed on this page today would very likely be wrong by the time you read it. Get the current cap level from Ofgem and your own live rate from an Octopus quote.

Start with the three broad categories

Fixed: Unit rates and standing charge held for a set term, commonly 12 months. Price certainty for the term; may carry an exit fee if you leave before it ends.
Flexible / variable: Prices move with the market and track the price cap. No exit fee usually, but no certainty about next quarter's rates either.
Smart / time-of-use: Prices vary by time of day or by the half-hour, rewarding usage shifted to cheaper windows. Requires a smart meter and, in practice, usage you can genuinely move.

Fixed vs flexible: the trade-offs and break-even logic

A fixed tariff is essentially insurance against rising prices: you agree a rate today and pay it for the term regardless of what happens to wholesale costs. If prices rise after you fix, you win; if they fall, you are stuck above the market rate until the term ends or you pay an exit fee to leave early. A flexible tariff is the opposite bet: no certainty, but the freedom to benefit immediately if prices fall, and no exit fee to weigh up.

Fixing tends to make more sense when:

You value a predictable monthly budget over the possibility of catching a market dip
You expect prices to rise, or at least not fall meaningfully, over the term
The fixed rate on offer is close to or below the current flexible/capped rate, so you are not paying a large premium for certainty
You are not planning to move home or radically change your usage during the term

Illustrative worked example — break-even on an exit fee

Suppose (illustrative figures only, not current rates) a household is quoted a fixed tariff that works out around £120 a year cheaper than staying on their current flexible tariff, and the fixed tariff carries a £75 total exit fee should they need to leave early. If they are confident they will stay on supply for at least eight months (roughly £75 ÷ £120 × 12), the saving covers the exit-fee risk. If they expect to move house or switch again within a few months, the arithmetic looks far less attractive. Always run this calculation with your own quoted figures, not these illustrative numbers.

Time-of-use and smart tariffs, in general terms

"Smart tariff" is an umbrella term for several distinct products that all rely on a smart meter sending frequent reads. The common thread is that the price you pay depends on when you use electricity, not just how much.

Off-peak overnight: A defined cheap window, typically several hours overnight, alongside a standard day rate. Straightforward to understand and plan around.
Half-hourly / agile pricing: Rates that change every half hour, generally tracking wholesale market movements. Potentially the cheapest option for very flexible usage, but the most volatile.
Export tariffs (solar): A rate paid to you for electricity your solar panels or battery send back to the grid, separate from your import (buying) rate.
EV-specific tariffs: Built around a cheap overnight or off-peak window intended to align with home EV charging, sometimes with smart charging or vehicle-to-grid features.
Heat-pump tariffs: Structured around heating load rather than EV charging, sometimes with a different day/night balance to reflect how heat pumps are typically run.

Each of these generally requires some combination of the following, and it is worth checking all of them before assuming a smart tariff will suit you:

A working SMETS2 smart meter (or an older SMETS1 meter enrolled and communicating correctly) sending the required reading frequency
Consent to half-hourly data settlement, where the tariff needs it
Compatible hardware — a smart EV charger, inverter/battery system, or heat-pump controller that the tariff is designed to work with
A genuine ability to shift usage — timers, automation or simply a routine that lets you run big loads in the cheap window

These tariffs suit people who can move meaningful load — an EV charging overnight, a battery charging on cheap rates and discharging at peak, or a heat pump on a programmable schedule. A household that mostly uses gas for heating and has average, static electricity use during the day is unlikely to see much benefit from a time-of-use structure, however appealing the headline off-peak rate looks.

Economy 7 and legacy multi-rate meters

Economy 7 predates modern smart tariffs: a two-rate structure, usually with an older meter, giving a cheaper night rate across roughly seven hours and a higher rate for the rest of the day. It was designed around storage heaters and is still around today, particularly in homes that never moved off it. If you have Economy 7, it is worth comparing it against a modern smart time-of-use tariff with a working smart meter, since the newer options are often more flexible about when the cheap window falls and how rates are structured.

Prepayment

Prepayment tariffs let you top up in advance rather than being billed in arrears, and are increasingly delivered through a smart meter rather than a physical token or key. The price cap sets separate maximum rates for prepayment, standard credit and Direct Debit, and these levels are not identical, so a prepayment household should compare its own quote rather than assume parity with a Direct Debit household on the same tariff name.

The Smart Export Guarantee and selling solar back, in outline

If you generate your own electricity — most commonly from rooftop solar — the Smart Export Guarantee is the regulatory framework requiring licensed suppliers to offer a payment for electricity you export to the grid. Suppliers set their own export tariff and terms within that framework, and rates can vary by whether you also import from the same supplier, whether you have a battery, and how the export is metered. This is a distinct rate from your import (buying) tariff, so a strong headline import rate does not tell you anything about the export terms; check both separately on a live quote.

How to read a live quote and compare like-for-like

Confirm the annual kWh estimate is based on your real usage, not a generic default
Check whether the tariff is fixed or flexible, and for how long a fixed rate is held
Look for an exit fee, its amount, and whether it is waived for a house move
Note the payment method assumed (Direct Debit, prepayment, receipted) — rates differ by method
Check whether a smart meter or half-hourly consent is required, and whether you already have one
For time-of-use tariffs, look at the exact cheap window times, not just the headline rate
For solar, check the export rate and payment frequency separately from the import rate

When comparing two suppliers, hold as many of these variables constant as you can — same postcode, same annual kWh, same payment method, similar term length — otherwise you are not comparing tariffs, you are comparing different assumptions.

Which household pattern fits which tariff?

Low-usage, out most of the day: A flat fixed or flexible tariff with a low standing charge relative to unit rate matters more than chasing a time-of-use structure with little to shift.
Family with an evening peak: Time-of-use tariffs can work against you if your peak load falls in the expensive window; a straightforward fixed or flexible tariff is often simpler and safer.
EV owner charging at home: A time-of-use or EV-specific tariff with a cheap overnight window is usually the strongest single opportunity, provided you can reliably charge overnight.
Solar plus battery: Export terms and the ability to store cheap imported energy for later use matter more than the headline import rate; model your generation pattern before choosing.
Heat pump household: Look closely at how heating load spreads across the day and how a time-of-use tariff's windows align with your heating schedule before switching from a flat rate.
Prepayment: Compare the prepayment-specific rate and standing charge on your live quote; do not assume it matches the Direct Debit rate on the same tariff name.
Second home / low, irregular use: A flexible tariff with no exit fee usually suits better than a fixed term, since you may not know how long you will keep the supply active.

Five common mistakes when choosing a tariff

Choosing a time-of-use tariff for its headline off-peak rate without checking whether you can actually shift usage into that window
Comparing an annual estimate based on generic usage instead of your own real kWh figures
Ignoring the exit fee on a fixed tariff when calculating whether switching again later would be worthwhile
Assuming a smart meter is already compatible with a specific tariff without confirming it is a working SMETS2 meter sending the required reads
Treating a referral or joining credit as a reason to pick a tariff, rather than a one-off bonus on top of a decision made on cost and fit

Switching tariff within Octopus, and whether it affects a referral

Moving between Octopus tariffs — for example from a flexible tariff onto a fixed one, or onto a time-of-use tariff once you get an EV — is an internal tariff change rather than a new supplier switch, and it is usually arranged through the online account or app without a fresh switching process. It does not undo or reduce a referral credit already earned on your original sign-up, because that credit is tied to the initial qualifying switch and first successful Direct Debit, not to which tariff you happen to be on afterwards. See when the referral credit is actually paid for the payment trigger in detail.

Where to find authoritative current rates and terms

For live unit rates, standing charges and named tariff availability, use Octopus Energy's own quote tool and tariff pages for your postcode, and Ofgem's published price cap figures for the regulatory ceiling on default tariffs. Both update on a schedule this page cannot match, which is exactly why we describe structure here rather than numbers.

Glossary

Unit rate: Price per kWh consumed.
Standing charge: Fixed daily charge regardless of usage.
Price cap: Ofgem's ceiling on default-tariff unit rates and standing charges, reviewed quarterly.
Fixed tariff: Rates held for a set term, possibly with an exit fee for early departure.
Flexible/variable tariff: Rates that move with the market and price cap, typically no exit fee.
Time-of-use tariff: Rates that vary by time of day or half-hour.
Half-hourly settlement: Billing based on actual consumption in each half-hour period, requiring smart-meter data and consent.
SMETS2: The current generation of smart meter standard, generally required for modern time-of-use tariffs.
Economy 7: A legacy two-rate day/night tariff, usually paired with an older meter.
Prepayment: Paying for energy in advance rather than by monthly bill in arrears.
Smart Export Guarantee (SEG): The scheme requiring suppliers to pay for electricity exported to the grid from small-scale generation.
Exit fee: A charge for leaving a fixed tariff before the end of its term.
Annual estimate: A projected yearly cost based on unit rates, standing charges and assumed kWh usage.
VAT (domestic): Charged at 5% on domestic gas and electricity, included in quoted rates.

Risk notes

Prices, availability and eligibility change; always confirm on the live quote.
Time-of-use savings depend on behaviour, not just the tariff.
A tariff requiring equipment you do not own is not a saving, it is a purchase decision.
Exit fees on a current contract can outweigh a full year of modest savings.

Referral neutrality

Joining through a referral link does not change your tariff options, your unit rates or your standing charge, and it does not remove the need to compare. The £50 credit is paid on a qualifying switch regardless of the tariff you choose, so choose on cost and fit.

Ready to compare? See what happens during the switch, read our Octopus Energy review, or check when the £50 referral credit is paid.

Octopus Energy tariffs explained