How Do Your Energy Bills Compare to the UK Average?

Energy bills are an unfortunate but ever-present part of modern life. They can vary significantly depending on factors like location, consumption and the sources used. As energy prices in the UK creep up, you might wonder how your bills stack up against the national average.

What are the Average Energy Bills?

Fuel prices are constantly in flux, making it difficult to predict future expenses accurately. Your bills could come in above or below the average mark, depending on your consumption. If you’ve yet to sign up for a fixed-rate plan, your costs will fluctuate based on wholesale gas and electricity prices and your chosen supplier.

According to Ofgem data, the typical British household consumes around 2,700 kWh of electricity and 11,500 kWh of gas annually, translating to an average monthly usage of 242 kWh for electricity and 1,000 kWh for gas. These figures represent households with 2 to 3 individuals that have average consumption habits.

As of July 2023, the average gas outlay in the UK stands at £901.20. Several market factors have hit gas pricing hard, including the Russia-Ukraine conflict.

Typical electricity expenditure amounts to £873.19. The cost of generating electricity in the UK is heavily influenced by the cost of gas used in the production process. Electricity bills have been steadily growing since late 2021 due to the surge in wholesale gas prices, but a reduction is on the horizon.

Naturally, no one wants to overpay for their energy, so understanding your expected consumption and average costs can help you compare prices from providers.

How are Energy Bills Calculated?

Different energy suppliers might have varying ways of calculating your gas and electricity bill, but they will typically include two primary charges:

Unit Rate

The unit rate is the price per kilowatt hour (kWh) of gas or electricity you've agreed to with your energy provider. This rate can be either fixed or variable.

Standing Charge

In addition to the unit rate, you will pay a fixed daily fee, regardless of your actual consumption. This charge covers essential operational expenses, such as metering, maintenance of pipes and cables and connecting your home to the grid. It’s similar to line rental charges on broadband contracts.

What is a Kilowatt Hour?

A kilowatt hour, often abbreviated as kWh, is the measurement unit for quantifying energy consumption. One kWh equates to 1,000 watts of energy used per hour.

Nearly all your appliances operate by utilising watts of energy, each with its own energy consumption rate. To add some context, it takes roughly one kWh of energy to boil ten kettles, complete a full washing machine cycle or keep a laptop running for two days.

The Energy Price Cap (due to start on 1st October 2023) and the Energy Price Guarantee limit the amount providers can charge you per kWh.

The Energy Price Guarantee

In response to criticism over an impending 80% rise in energy costs, the UK Government introduced the Energy Price Guarantee (EPG) in October 2022. The scheme's objective, planned to last until late 2024, was to limit the impact on billpayers by capping prices and compensating suppliers.

The EPG sets a cap on units of energy, not annual charges, which means households using more fuel will continue to pay more than those who use less.

The OFGEM Price Cap

The Office of Gas and Electricity Markets (OFGEM) is a Government regulator of British energy suppliers. OFGEM applies its own ‘price cap’ on suppliers in the UK, limiting them to a maximum amount they can charge consumers for each kilowatt hour (kWh) of energy used.

While the Government calculates its EPG by unit rates, OFGEM bases its price cap on daily standing charges.

How Can I Save Money on Energy Bills?

Are rising energy costs making you look for ways to be more efficient and reduce your monthly expenditure? At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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