Energy bills: How much is the average electric bill?
Trying to work out the average electric bill in the UK is no mean feat, as it depends on a number of different factors. One thing we can say for sure is that many Britons are paying far too much for their energy. Read on to understand how your own situation affects your electricity costs and how much you should really be paying.
What is the average electric bill in the UK?
According to data from the Department for Business, Energy and Industrial Strategy (BEIS), the UK’s average electric bill across all payment types in 2020 was £707 annually or £58.92 per month. However, these figures don’t paint the full picture, as there are a variety of factors to consider when calculating your bill.
Firstly, the type of tariff you’re on and even how you pay has a huge impact on your final costs.
If you’re on an Economy 7 tariff you may be paying less at certain times, but your electricity will cost a lot more during peak hours.
In 2020, the average Economy 7 electricity bill was £866, a whopping £159 more than with a standard meter. As fewer providers continue to offer this as an option, we believe customers may be better off ditching Economy 7 and switching to either a fixed tariff or a prepayment plan.
Another key point to consider when trying to work out the average electric bill is where you live, as prices vary dramatically from one part of the UK to another. For example, although the average electricity unit rate nationwide was £0.174 per kilowatt-hour (kWh), in Merseyside and North Wales it was £0.186/kWh while Yorkshire received the cheapest electricity, at just £0.168/kWh per kWh.
What’s a unit rate?This refers to the price you pay per unit of electricity. Electricity units are measured in kilowatt-hours (kWh) - that’s one kilowatt of electricity being used over an hour. You can usually find how much energy an electrical household appliance uses in watts on its packaging.
Read on to understand why the average electric bill in the UK is so expensive and learn how much you should really be paying for your energy.
Why is my electricity bill so high?
Chances are the main reason your average electric bill is high is due to the type of tariff you’re on. Many don’t realise that they’re paying for their electricity on a standard variable tariff, which is usually the most expensive rate suppliers have to offer. The reason for this is that once an initial energy contract runs out, customers are often defaulted straight on to this tariff without even realising.
In this case at least, loyalty does not pay. Most customers could save money simply by switching energy supplier or tariff. We suggest doing so every 12-18 months to get the best deal available. Of course, in addition to your tariff cost, you should also consider how much energy you’re using and see where you could potentially cut down.
How much should my electric bill be?
There are a few different factors that affect how much electricity you use and therefore how much you should be paying on average. Consider the size of the house and how many people are living there - a small house or flat with one occupant will obviously spend a lot less than a family household of five.
To understand how much you should be paying, you’ll need to have an idea of your average electricity usage. To get an accurate estimate of this, we recommend using our handy energy consumption calculator.
- What’s the average electricity consumption? Although your final energy costs will depend on a number of factors, the industry standard to calculate average annual electricity usage is generally accepted as follows:
- Small house or flat with one or two bedrooms: 1,800kWh
- Medium house with three bedrooms: 2,900kWh
- Large house with four bedrooms or more: 4,300kWh
Calculate your electricity costs
Once you have a clear understanding of your electricity usage, you’ll be able to calculate how much you should be spending on your bills.
For our example, we’ll be using a three-bedroom house in the south of England with an average electricity consumption of 2,900kWh. As we saw above, electricity prices do vary by region, so your own average electric bill may work out cheaper or more expensive.
In addition to the unit rate, your electricity bill also contains a standing charge, which is a daily fee to cover operating costs such as maintaining the national gas grid and other related charges. This part of your bill stays the same no matter how much electricity you use.
Therefore to calculate our electricity bill, we need to consider:
- Unit rate
- Standing charge
- Standard VAT of 5%
In this example, we’ve used a fixed tariff with one of the larger energy suppliers. Our unit rate is 17.604p per kWh with a daily standing charge of 23.72p. To get our final price we’ve added the compulsory 5% VAT that applies to energy costs.
| Electricity | Annual cost |
|---|---|
| Unit rate | £0.17604 x 2,900 = £510.52 |
| Standing charge | £0.2372 x 365 = £86.58 |
| Total cost of electricity | £597.10* |
| VAT of 5% | £29.855 |
| Annual cost | £626.95* |
*Final costs are rounded.
As our final cost comes out at £626.95, we’re paying less than the Department for Business Energy and Industrial Strategy’s ‘average’, though there are certainly more savings to be had. Let's look at another fixed tariff from one of the smaller energy suppliers under the following terms:
- Unit rate: 13.884 per kWh
- Standing charge: 28.35p per day
Let’s take a look at how this tariff fares against our previous plan.
| Electricity | Annual cost |
|---|---|
| Unit rate | £0.13884 x 2,900 = £402.64 |
| Standing charge | £0.2835 x 365 = £103.48 |
| Total cost of electricity | £506.12* |
| VAT of 5% | £25.306 |
| Annual cost | £531.43* |
*Final costs are rounded.
Although the standing charge was more expensive than in our previous estimate, the overall cost is less. Getting the right balance between these two charges is essential when choosing a new electricity tariff.
Next, let’s take a look at some of the best offers on the market at the moment, to give a better understanding of how much you should be paying for your electricity.
How can I lower my average electric bill?
The simplest way to cut your electricity bill is by switching energy provider. To give you a sense of how much you could save, we’ve broken down some of the main suppliers’ cheapest tariffs for an average-sized household in the south of England using 2,900kWh of electricity a year.
For each tariff we have chosen the option to pay in monthly instalments by Direct Debit. This usually cuts costs even further, as most suppliers offer a discount for choosing this payment method.
Judging by these tariffs, if the average electric bill is £679 it seems like the majority of Brits are paying far over the odds for their electricity.
If you want to reduce your electricity bills, you should really shop around for the best deal for your circumstances. Switching your energy provider is simple and only takes a matter of minutes. To switch, you can contact your chosen provider’s customer service or make the switch through a third-party service.
We recommend you have the following details ready when you get in touch.
- The account holder name and address.
- Your meter type.
- The name of your current energy supplier and tariff.
- Your annual energy consumption and/or spend.