How UK energy bills actually work
Your energy bill has two components: a unit rate (what you pay per kWh of energy you actually use) and a standing charge (a fixed daily fee just for being connected to the grid, regardless of usage).
The Ofgem price cap limits the maximum unit rate and standing charge suppliers can charge on default tariffs. It is reviewed quarterly. Crucially, it caps the rate per unit — not your total bill. Higher usage always means a higher bill.
How to read your energy bill
- kWh — kilowatt-hour. A 1kW appliance running for 1 hour uses 1 kWh.
- Unit rate — what you pay per kWh. Currently capped at ~24.5p/kWh (electricity) and ~6.24p/kWh (gas).
- Standing charge — electricity ~53p/day, gas ~30p/day. These alone add ~£300/year.
- Dual fuel — some suppliers offer a small discount for taking both gas and electricity together.
Average UK household energy usage
- Electricity: ~3,100 kWh/year (low: 1,900 kWh; high: 5,000+ kWh)
- Gas: ~11,500 kWh/year (low: 7,500 kWh; high: 17,000+ kWh)
- Electric-only households (heat pump) use more electricity but pay no gas standing charge
How to reduce your energy bills
- Switch tariff or supplier — fixed-rate tariffs are available again and can be cheaper than the Ofgem cap
- Improve insulation — loft and cavity wall insulation are the highest-ROI home improvements for energy costs
- Smart meter — accurate usage data means no estimated bills
- Off-peak tariffs — Economy 7 or Octopus Go can be significantly cheaper overnight (EV charging, dishwasher, washing machine)
- Government schemes — Warm Home Discount (£150), ECO4 insulation grants for eligible households
Frequently asked questions
What is the Ofgem price cap?
The Ofgem price cap limits the maximum unit rate and standing charge suppliers can charge on default tariffs, reviewed quarterly. It caps the rate per unit — not your total bill. If you use more energy, you pay more.
How do I find my kWh usage?
Check your latest energy bill or online account — annual kWh usage is usually shown clearly. Smart meters show real-time usage. If you can't find it, use the UK averages pre-filled above.
Should I fix my energy tariff?
If fixed rates are below the current Ofgem cap, they're worth considering for price certainty. Use a comparison site with your actual kWh figures to see what's available for your postcode.
Why are standing charges so high?
Standing charges cover grid infrastructure maintenance. They've increased significantly in recent years. Some tariffs offer zero standing charges but higher unit rates — better suited to very low-usage households.
How much could I save by switching?
Switching supplier or tariff can save £100–£500+ per year. Compare using your actual kWh figures from this calculator to get accurate personalised quotes.