The Ultimate Guide to Lowering Your Fuel Bill in UK

The energy cost in the UK is an essential factor for any household, and the average dual fuel energy bill is a crucial indicator of the overall energy market. As of 1 October 2023, the average energy bill in the UK has been estimated to be £738.45 for electricity and £792.35 for gas, based on the estimated annual gas consumption of 11,500 kWh and electricity consumption of 2,700 kWh for a medium-sized household with 2-3 people.

Recent months have seen a rise in energy bills due to several factors, including the Russia-Ukraine war and the increased wholesale gas prices. However, there are signs that bills are now beginning to fall, as the gas price decreases. As such, it is essential to understand the current business energy prices market to make informed decisions about energy bills.

Average Gas and Electricity Consumption and Costs in UK by House Size

The average energy bill in the UK varies depending on many factors, including the size of your home, the number of people living there, and your energy usage.

Here is a table showing the average energy bills by house size in the UK, based on Ofgem's estimates of average energy usage:

This table shows the average annual gas and electricity consumption and bill for each energy user group, broken down by house size and payment method.

The average energy consumption and bill increases as the house size increases. This is because larger houses typically have more appliances and more people.

Pay-on-receipt customers typically pay more for their business energy compared to Direct Debit customers. This is because Direct Debit customers benefit from a discount on their energy bills.

Average Annual Electricity Bill Spend by House Size

Here is a table showing the average annual electricity bill spent by house size in the UK, based on Ofgem's estimates of average energy usage:

Average Gas Bill Spend by House Size

Here is a table of the average annual gas consumption and bill spend by house size in the UK:

Things to understand

The average annual gas consumption increases as the house size increases. This is because larger houses typically have more appliances and more people.

The average annual gas bill also increases as the house size increases. Pay on receipt customers typically pay more for their gas than direct debit customers. This is because direct debit customers benefit from a discount on their energy bills.

Factors That Impact Your Energy Bill

Several factors can impact your energy bill, including:

Energy usage

The amount of energy you use is the most significant factor that impacts your energy bill. The more energy you utilise, the more you will be charged for the bill. This is influenced by some factors that include:

• The size of your home: Larger homes commonly use more energy, as they have more space to heat and cool.

• The number of people living in your home: More people means more energy consumption, as more appliances and devices are being used and more mouths to feed.

• Your home's energy efficiency: A well-insulated home with energy-efficient appliances will use less energy than a poorly insulated home with old, inefficient appliances.

• The climate you live in: Residences in colder areas consume more energy for heating, whereas those in warmer regions require more energy for cooling.

• Your lifestyle: If you spend a lot of time at home and use appliances frequently, your energy usage will be higher than if you spend a lot of time away from home and don't use appliances as often.

The type of Energy tariff you're on 

The type of energy tariff you're on can also impact your energy bill. There are two primary kinds of energy tariffs: fixed and variable. With a fixed tariff, your energy price is fixed for a certain period, typically 12 or 24 months. With a variable tariff, your energy price can vary at any time as per the wholesale cost of energy.

Metre types

The type of metre you have can also influence your energy bill. There are two major types of energy metres: standard and smart. Standard metres measure your energy usage in kilowatt-hours (kWh). Smart metres track how much energy you're using right away and send this information to your energy company.

The type of tariff you're on and the type of metre you have can affect your energy bill in a number of ways. For example, if you're on a fixed tariff and your energy supplier raises its prices, your bill will not increase until your fixed term ends. However, if you're on a variable tariff, your bill could increase anytime if your energy supplier raises its prices.

Smart metres can also assist you in saving money on your energy bill by providing real-time details about your energy usage. This information can make it easy for you to locate areas to reduce your energy consumption.

The UK’s region you live in

The region of the UK you live in can also influence your energy bill. This is because the cost of delivering energy to different regions varies. For example, homes in rural areas may have higher energy bills than homes in urban areas, as delivering energy to rural areas is more expensive.

The method you utilise to pay your bill

The method you use to pay your energy bill can also have a small impact on your bill. Most energy suppliers provide a discount on unit rates to customers who pay by Direct Debit. Direct Debit makes it effortless for energy suppliers to budget and govern their cash flow.

Other factors that can influence your energy bill

Other factors that can impact your energy bill include:

• The time of year: Energy bills are typically higher in the winter when people use more energy for heating.

• The type of appliances you use: Some appliances, such as electric showers and tumble dryers, use more energy than others.

• Your daily habits: If you leave lights on when you're not in a room or don't turn off appliances when you're finished using them, this can waste energy and increase your bill.

Why are energy bills rising in the UK?

Energy bills are so high right now because of many aspects, including:

Supply and Demand

The global energy demand has increased in recent years, while energy supply has remained relatively constant. This has driven up the price of energy on the wholesale market.

The war in Ukraine

The recent Russia-Ukraine war has disrupted the global energy market and caused energy prices to rise further. Russia is a significant oil and gas exporter, and the war has led to sanctions against Russia that have reduced its energy exports.

The Cost of Living Crisis

The crisis is putting additional pressure on household budgets, making it more difficult for people to afford their energy bills.

The energy price cap is a government measure that limits the amount that energy suppliers can charge customers for their electricity and gas. However, the price cap has been raised several times recently due to the rising energy cost. This means that even customers on the energy price cap will see their bills increase.

What Are the Extra Costs in Your Energy Bill?

Your energy bill is a complex puzzle, with several aspects putting up the overall cost. The following is a breakdown of the important components of your energy bill:

Wholesale Energy Costs

This refers to the expenditure incurred by your energy supplier to procure the gas and electricity they provide. Several factors influence wholesale energy prices, including global supply and demand, geopolitical events, and the weather.

Network costs

This is the cost of transporting gas and electricity to your home through the network of pipes and wires. Network costs are regulated by the government and are charged to consumers by their energy suppliers.

Operating costs

This includes the costs related to running and maintaining an energy supply company, such as customer service, billing, and marketing.

Government-backed programmes

Energy companies must participate in several programmes to save energy and reduce emissions. The cost of these programmes is passed on to consumers via their energy bills.

VAT (Value Added Tax)

It is a tax applied on most goods and services in the UK. It is also charged on energy bills.

Profit margins and other costs

Energy suppliers must also cover their costs, such as salaries, rent, and profits. These costs are also transferred to consumers with the help of their energy bills.

It is important to note that the breakdown of your energy bill will vary depending on your energy supplier and the type of tariff you are on. However, the above components are the main factors contributing to your energy bill's overall cost.

How to Reduce Your Home Energy Costs?

Reducing home energy costs is more critical than ever with rising energy prices. Here are a few beautiful and unique tips:

Create an energy garden 

Planting trees and bushes near your home can keep it more relaxed in the summer and stop the wind in the winter. This can make your energy bills lower. An energy garden is a great way to add beauty and value to your home.

Install a solar water heater

Solar water heaters use the sun's free energy to warm your water, helping you save a lot of money on your energy bills. You can even get a government tax credit for installing a solar water heater.

Use energy-efficient appliances

When buying new appliances, search for models with the Energy Star label. Energy Star appliances are certified to use less energy compared to regular models, and this can help you in saving money on your energy bills in the long run.

Make your home more energy-efficient

You can do several things to make your home more energy-efficient, such as adding insulation, sealing air leaks, and installing energy-efficient windows. These improvements can help maintain a warm home during the winter and a cool one in the summer, which can save energy bills.

Use energy-efficient lighting

Another excellent way is switching to LED light bulbs to cut down on your energy usage and reduce your energy bills. LED bulbs use as little as 10% of the energy as traditional incandescent bulbs and can last up to 25 times longer. You can even find various colours and styles of LED bulbs to match your home's decor.

By following these suggestions, you can lower your home energy expenses, save money on your bills, and contribute to environmental protection by using less energy.

How is the energy bill calculated?

The energy bill is calculated based on two primary factors:

1. Unit rate: This is the price you admit with your energy supplier for each kilowatt hour (kWh) of electricity or gas you utilise. The unit rate can be variable or fixed.

2. Standing charge: It is a fixed daily price you pay alongside the unit rate, regardless of how much electricity or gas you utilise. The standing charge covers running costs like metering, maintenance of the pipes and cables that supply energy to your home, and keeping your home connected to the energy network.

To calculate your energy bill, your supplier will multiply the unit rate by the kWh you used during the billing period. They will then add the standing charge to get the total bill amount.

Conclusion 

Knowing about the average energy bill in the UK is essential for all homes. Right now, it's about £738 for electricity and £792 for gas for an average-sized household. Your bill can change based on how much energy you use, the type of payment plan you have, where you live, and more. 

Energy costs are rising for different reasons, like the war in Ukraine and the cost of living. You can use energy-efficient appliances to save money and make your home more energy-friendly. Being smart about your energy use allows you to manage your bills better in the UK.

FAQs

What factors affect the average dual fuel energy bill in the UK? 

The factors that affect the average dual fuel energy bill in the UK include the type of property you live in, the size of your property, your energy usage habits, the number of people in your household, and the energy tariff you are on.

How can I minimise my dual fuel energy bill? 

There are many ways to reduce your dual fuel energy bill, such as switching to a more energy-efficient tariff, making your home more energy-efficient, and reducing your energy consumption.

What should I do if I'm struggling to pay my energy bill?

If you need help paying your energy bill, contact your supplier for payment options. Government schemes and energy charities can also assist those in financial need. Don't hesitate to explore these resources to help manage your energy costs.

Are there any government programs that provide financial assistance for energy bills in the UK?

Yes, government schemes like the Warm Home Discount and Winter Fuel Payment offer financial support to eligible households to help with energy costs.

Can I change my energy supplier to pay less for gas and electricity in the UK?

Yes, you can switch to a different energy company to try and pay less for your gas and electricity. You can discover more affordable options by comparing prices from various companies. It's usually easy to switch, and you can do it online or by contacting the new company.