Why This Question Matters More Than Most People Realise — In the UK energy market, the most expensive decision is often not a bad choice — it's making no choice at all. Millions of households remain on their supplier's default tariff, also known as a Standard Variable Tariff (SVT). Many believe that because this tariff is regulated by Ofgem's energy price cap, it must be "safe" or "fair". But "capped" does not mean "cheap". To understand whether you should compare energy prices or stay on your default tariff, we first need to understand what the default tariff actually is, how it works, and how suppliers price it.
What Is a Default Tariff?
- Your fixed tariff ended and you did not switch
- You moved into a new home and did nothing
- You cancelled a fixed contract
- You never selected a tariff manually
“Do nothing” option.
How Price Cap Works
Ofgem cap does NOT limit total bill. It limits max unit rate & standing charge.
- Wholesale gas prices
- Electricity market conditions
- Network costs & levies
- Supplier operating costs
Why Default Costs More
Suppliers split customers: active switchers vs passive default.
- Active switchers: compare, respond, willing to leave → aggressive competition
- Passive customers: rarely switch, inertia, less price-sensitive
Default tariffs = stability & margin. Fixed = acquisition. That's where savings come from.
Fixed vs Default Economics
✅ Fixed tariff: locks wholesale, predictable revenue, lower pricing.
⏳ Default tariff: less risk, quarterly adjustments, no discount incentive.
Risk & commitment drive pricing.
Real-World Cost Comparison 2026 example
Default Tariff
price cap level- Electricity 2,900 kWh
- Gas 12,000 kWh
12-Month Fixed Deal
competitiveHigher usage: £250–£300+ · Low usage: smaller but meaningful
Over 3 years, differences compound.
Why households stay
- “I'll switch later.”
- “It's too complicated.”
- “Price cap protects me.”
- “I don't want disruption.”
- “I don't understand tariffs.”
When default makes sense
- Moving home within weeks
- Expect wholesale price drop
- Need maximum flexibility
- Monitoring volatility
⚠️ Even then, comparison is essential — assumption is expensive.
Default & price volatility
If wholesale rises → cap rises → default rises. If wholesale falls → default falls. Fixed gives price certainty. Default transfers volatility risk to you.
Exit fees vs flexibility
Default: no exit fees. Fixed: £30–75 per fuel exit fees.
Matter only if: you leave early, prices drop, you switch quickly. Even with fees, fixed often cheaper overall.
The loyalty problem & cost of doing nothing
Energy suppliers do not reward loyalty. Unlike insurance, pricing is shaped by new customer competition. Staying without comparing: no rewards, no discounts, no reduction — it quietly increases costs.
How to compare properly
- Total annual cost
- Unit rates (elec & gas)
- Standing charges
- Contract length
- Exit fees
- Payment method requirements
Not bonuses or headline rates. Compare total cost over time.
UtilityKing approach
- Shows price cap comparison clearly
- Calculates total annual savings
- Includes exit fees in projections
- Avoids misleading teaser pricing
- Postcode-accurate estimates
Clarity, not urgency.
📌 Final Assessment: Compare First, Decide Second
The default tariff is: flexible regulated convenient. But it is rarely the most cost-effective option. Comparing does not obligate you to switch — it simply reveals whether you're overpaying. And in most cases, households on default are.
Frequently Asked Questions
Not always — but it is rarely the cheapest option available.
No. Infrastructure remains identical.
No. It is a regulatory maximum.
Every 6–12 months or before a fixed deal ends.
No. Comparing does not affect credit score or supply.
👉 Feel free to contact us
See instantly whether staying on default is costing you© UtilityKing 2026 — Independent UK energy guide. All figures based on January 2026 data.