How often does a variable business energy rate change?

This depends on the supplier and contract, but rates are commonly reviewed monthly or quarterly in line with wholesale market movements. The exact review frequency should be set out in the contract terms.

Is a variable tariff riskier than a fixed one?

In terms of budget predictability, yes, since the rate can change during the contract term. However, it also carries the potential to benefit from falling wholesale prices, which a fixed tariff would not capture.

Can a small business use a variable energy tariff?

It is possible, but variable tariffs are more commonly suited to larger businesses with the resource to monitor market movements and manage budget uncertainty. Small businesses often prefer the predictability of a fixed tariff.

What is flexible procurement?

Flexible procurement is a purchasing approach, typically used by larger energy consumers, where energy is bought in blocks at different times to average the price paid across a longer period, rather than fixing a single rate for the whole term or floating entirely on a variable rate.

Variable Business Energy Tariffs

A variable business energy tariff moves in line with wholesale market prices over time, typically reviewed on a monthly or quarterly basis, meaning the rate a business pays can rise or fall during the life of the contract. This is different from a fixed tariff, where the rate is locked for the agreed term.

Variable tariffs suit businesses that can tolerate some cost fluctuation and want the flexibility to benefit if wholesale prices fall, but they carry more budgeting uncertainty than a fixed rate and require closer monitoring of bills.

Variable rates move with wholesale market prices, typically reviewed monthly or quarterly

Bills can rise or fall during the contract term

Suits businesses able to tolerate cost fluctuation

Requires more active monitoring than a fixed tariff

Can offer savings if wholesale prices fall after the contract starts

How variable pricing works

On a variable tariff, the unit rate is typically linked to a wholesale price index or reviewed periodically by the supplier based on current market conditions. Some flexible procurement arrangements, more common for larger businesses, allow purchasing in blocks over time to average out the rate paid across the contract.

Who variable tariffs suit

Larger businesses with dedicated energy management resource
Businesses comfortable with budget fluctuation
Organisations expecting wholesale prices to fall
Multi-site operators using flexible procurement to manage risk across sites

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Risks of a variable tariff

The key risk of a variable tariff is exposure to rising wholesale prices, which can increase costs unpredictably during the contract term. This makes budgeting more difficult, particularly for smaller businesses without the resource to actively track energy markets and adjust operations in response.

Variable versus fixed decision factors

Factor	Favours fixed	Favours variable
Budget certainty needed	Yes	No
Ability to monitor market	Not required	Required
Market outlook	Expecting prices to rise	Expecting prices to fall
Business size	Small to medium	Medium to large

Fixed vs variable decision factors

Variable Business Energy: frequently asked questions

Related business energy pages

Fixed Business EnergyA guide to fixed business energy tariffs, when they suit a business and what risks they carry.Business Energy TariffsA guide to the main types of business electricity and gas tariffs available in the UK market.Business Energy ContractsAn explanation of how business energy contracts are structured, agreed and terminated.Large Business EnergyLarge business energy customers typically use half-hourly metering and can access flexible purchasing arrangements not available to smaller sites.