Fixed Rate vs Discount off Tariff: Which Electricity Plan Is Better?

How each plan type is priced

A fixed-rate plan locks in one cents-per-kWh rate for the full length of your contract, usually somewhere between 6 and 24 months depending on the retailer. Your rate doesn't change even if the SP tariff moves up or down next quarter.

A discount-off-tariff plan is priced as a percentage discount off the prevailing SP tariff — for example, "15% off tariff" means your rate is always 15% below whatever SP Group's current regulated rate is. Because the SP tariff is reviewed quarterly, your effective rate on this type of plan can change up to four times a year.

The trade-off in one sentence

Fixed rate trades away the chance of automatically benefiting from a lower tariff, in exchange for protection if the tariff rises; discount off tariff does the opposite — you benefit automatically if the tariff falls, but you're exposed if it rises.

When a fixed-rate plan tends to make more sense

• You expect energy costs (and therefore the SP tariff) to rise during your contract period.
• You'd rather know your exact rate for the next year and budget around a predictable number.
• You're comparing a fixed rate that's already lower than the current SP tariff.

When a discount-off-tariff plan tends to make more sense

• You expect the SP tariff to stay flat or fall over your contract period.
• You're comfortable with your bill moving up or down each quarter along with the tariff.
• You want a plan that's simple to reason about — a fixed percentage below whatever the official rate is, with no guessing about future pricing.

A worked example

Say the current SP tariff is 27¢/kWh. A "15% off tariff" plan would put your effective rate at roughly 22.95¢/kWh today. A fixed-rate plan advertised at 24¢/kWh looks more expensive right now — but if the SP tariff later rises to 30¢/kWh, the discount-off-tariff plan's effective rate rises to 25.5¢/kWh, while the fixed-rate plan stays at 24¢/kWh and becomes the cheaper option. The comparison only holds for that moment in time, which is why it's worth checking effective rates against live tariff data rather than the headline discount percentage alone.

A 3-year backtest using real tariff data

Rather than one hypothetical snapshot, here's what actually would have happened using SP Group's real published quarterly tariff since 2021. To keep the comparison consistent, each scenario below assumes a fixed rate locked in at 10% below the tariff at the moment of signing (held flat for a 24-month contract), against a discount-off-tariff plan at a flat 15% off the tariff, recalculated every quarter — illustrative discount levels chosen for the comparison, not the historical price of any specific real plan.

*Only 5 quarters of real data are available for the Q3 2025 contract so far (through Q3 2026), not the full 24 months.

Signing in Q3 2021 — near the pre-energy-crisis low — meant a fixed rate that stayed cheap while the tariff climbed sharply through 2022; anyone floating with the tariff during that stretch paid more on average. Signing in Q1 2024, close to a local peak, worked the other way: the tariff spent the next two years drifting down, so floating with a discount beat a rate locked in at the peak. The Q3 2025 case is the most interesting: discount off tariff still wins on average over the partial window we have data for, but the Q3 2026 tariff spike alone (see our SP tariff guide for why it happened) already pushed that single quarter's discount rate above the fixed rate — a live example of the exact risk fixed-rate plans protect against. Which plan wins depends entirely on where the tariff goes next, which is exactly why neither structure is universally better.

How to compare live

Our plan comparison page recalculates every discount-off-tariff plan's effective rate against the current SP tariff automatically, and estimates a monthly bill for both plan types based on the usage you enter — so you can compare them on the same basis instead of just comparing a discount percentage against a flat rate.

Sources

• SP Group — historical electricity tariff data
• SP Group — tariff information
• Open Electricity Market — official site