How much does gas and electricity cost?

In 2020, the average home paid £707 for their electricity bill and £557 for their gas bill.

The picture behind these figures is complicated, especially for customers on prepayment meters or Economy 7 meters.

Challenger energy suppliers make a point of keeping their energy unit prices low, although watch out for high daily standing charges that may increase monthly bills.

How much does energy cost?

Figures from energy regulator Ofgem published in July 2021 found the average customer on a fixed energy tariff was paying £1,015 per year for their dual fuel energy supply while customers on variable tariffs were paying around £1,138.

It isn't only the actual wholesale cost of electricity and gas that goes into calculating how much an energy bill will be and we have a full guide discussing why energy bills keep going up.

However, when we're searching for a new energy deal, we will see unit prices for gas and electricity listed in our tariff guides.

Let's take a closer look at those.

How much is the average gas bill?

Government figures for 2020 show the average gas bill across all payment types was £557 per year. This was a decrease of £52 on 2019.

The average Direct Debit bill fell by the same amount, while customers with pre-payment meters saw a decrease of £45.

These figures are based on average gas usage of 13,600kWh, so they will be higher than customers who live in smaller properties, for example, would expect to pay.

How much is the average electricity bill?

According to the Department for Business, Energy & Industry Strategy (BEIS), the average electricity bill across the country stood at £707 per year in 2020. This was a rise of £9 on the previous year.

The overall figure masks some differences depending on how we pay our bills though:

• If you paid by Direct Debit, the average bill was £690 (an increase of £8)
• If you were a customer with a prepayment meter, the average bill was £724 (an increase of £25)
• If you had an Economy 7 meter, the average bill was £866 (an increase of £14)

The Government calculates these estimated bills based on 3,600kWh of electricity usage for standard electricity and 5,100kWh for those with Economy 7 meters.

This doesn't exactly match the Ofgem average values of 2,900kWh and 4,200kWh respectively, so be aware of that when comparing cheap energy deals and choosing Ofgem averages as a guide.

We'd always recommend using actual usage figures from a recent energy bill to get a more accurate quote when you search for a new energy deal.

Find out how to read your energy bill and understand what all the figures mean.

Which are the cheapest tariffs?

The averages described above are just that; averages. That means some people are paying a whole lot more than that, and some a lot less too. We've taken a look at some of the cheapest tariffs around at the moment; here's what we found.

Cheapest electricity tariffs by rate

The cheapest big name we found was Bulb, with their Vari-Fair tariff at 18.13p/kWh and a 26.31p standing charge.

Cheapest gas tariffs by rate

The cheapest big six supplier we found was SSE, with a one-year fixed tariff at 3.80p/kWh and a 24.92p standing charge.

Cheapest dual fuel by rate

The cheapest major supplier we found was Octopus and their Flexible Octopus tariff with electric at 18,22p/kWh and gas at 3.23p/kWh plus a 50.1p standing charge.

How is your energy bill calculated?

Most important to understand is how your bill is calculated by your supplier, which starts with the type of tariff you are on. For both gas and electricity, your tariff is made up of two distinct parts; the standing charge and the unit rate.

A standing charge is an amount you are charged every day whether you use a lot or a little energy. According to the Energy Saving Trust, the average standing charges are 24p per day for electricity and 26p per day for gas. However, every supplier chooses their own standing charge rate, and these can vary from 5p to 80p per day.

On top of this, you'll pay a per unit rate, which is measured in kilowatt hours (kWh). The amount you pay per kWh will depend on the tariff you are on, but to take a national average for 2019, for gas it's 3.8p and for electricity 14.37p.

Bear in mind that customers in different parts of the country can often pay different rates for their energy or standing charges due to varying costs of supply.

We're also seeing a rise in special electric vehicle (EV) tariffs to help EV owners charge their cars cheaply overnight. These often include lower rates per kWh of electricity overnight, but watch out for the small print to check exactly when the cheaper hours are.

What affects your gas and electricity cost?

There are many different things which will affect the cost of your energy bills. They include:

• The size of your home: Clearly a larger home is going to require more heating, and, as heating your house makes up around 60% of your energy bills, a bigger home is going to push up the costs.
• The insulation you have: Homes with good levels of loft and cavity wall insulation will retain heat much better than those without. Stopping heat loss means your heating system doesn't have to work as intensively, thereby saving you energy and money.
• The tariff you are on: Switching to a cheaper tariff is an easy way to drive down your bills. If you're paying more per kWh unit of heat or electricity, then your bills will be higher.
• How you pay and are billed for your energy: Many suppliers offer discounts for those who pay by direct debit, as well as those who choose paperless billing. Some suppliers also offer discounts on dual fuel tariffs, where you get both your gas and electricity from the same company.
• Your behaviour: The way you use your home and the appliances you use all affect how much your gas and electricity will cost too. Someone who is at home all day with a need to keep warm, such as an elderly person or a mum with a small baby, will use more energy than someone who is out at work all day.

Some of these factors are controllable by you, so if you're looking to cut down the size of your energy bills, think about what you can do. Simple acts like switching to low energy lightbulbs or improving your insulation can make a big difference to how much you pay. More information on this is available in our guide.

Verdict: Finding the cheapest supplier for you

As you can see, it's not always easy to compare tariffs. Many of the cheapest per unit tariffs have higher standing charges, and those with lower standing charges will charge more per unit.

On top of this, there are other factors to consider, such as whether you want to enter into a long fix, or whether you're prepared to take the risk with a variable tariff that could become more expensive.

The only way to really find a cheap tariff that suits you is by running an energy price comparison search. Our website provides a free personal projection from all the suppliers in the market, so you can see quickly and easily what your electricity and gas is going to cost for the year.

Find out more about switching supplier and finding the right deal for you here.