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Which is the Cheapest Electricity Supplier in the UK in 2018?

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If you think that your gas and electricity bills are increasing then don’t worry - you aren’t going crazy. Over the last couple of years there has been quite a large increase in the average energy bill in the UK.

Energy Bills are Getting More Expensive

In fact, the gap between the cost of gas and electricity and what people can afford to pay will rise by 9% in 2018. The companies claim this has been caused by rising wholesale energy prices.

The price of raw resources such as coal and gas do have a big effect on your bill. Wholesale energy prices make up 46.6% of you bill and can be affected by a variety of factors such as supply and demand, availability, wholesale costs, transport costs and infrastructure maintenance.

For example, the cost of transporting fossil fuels is set to increase by an average of 10% in the next year. Also, according to recent studies there will be a 35% increase in energy requirements by 2041, meaning that demand will increase - and with it will come considerable price increases.

The UK energy regulator, Ofgem, tries to regulate gas and electricity prices and prevent them from getting out of control. However, In February, they increased the payment price cap from the current average of £1,031 per year to £1,089 per year. This means that customers who are currently protected by this price cap could see their bills rise considerably.

Since this change was announced, five of the biggest companies in the UK have announced price rises, with their new prices being just short of the new limit.

So, yes - prices are going up but other than using energy saving gadgets and following some simple energy saving tips, one of the best ways to save money on your gas and electricity bills is switch supplier. Customers often feel stressed trying to find the cheapest deals and don't know how to switch. So, Selectra is here to do the work for you and to do a price comparison of the electricity suppliers on the market and see which company offers the most competitive tariffs.

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Cheapest Electricity Suppliers on the Market

We are going to take a look at some of the best energy deals available on the market and find out which electricity companies have the best prices for both fixed and variable tariffs.

There are hundreds of gas and electricity tariffs on the market at the moment claiming to be the cheapest but they can’t all be telling the truth.

A comparison of the market shows that there are 8 top contenders who have just emerged on the energy market and have rock bottom prices. We only looked at electricity providers which offered dual fuel tariffs. You probably won’t have heard of most of these companies in our top 8 so let’s find out a little bit more about what makes them special.

  1. Utility Point started in 2017 and is based in Poole. Their rock-bottom prices haven’t gone unnoticed and have recently been overwhelmed by the number of customers signing up.
  2. Avro Energy opened its doors in 2012 and is based in Hinckley in the West Midlands. They have fantastic customer service ratings.
  3. Igloo Energy isn’t just for Eskimos. This small supplier is working hard to make customers' homes smarter, more efficient and cost less to run.
  4. Usio Energy is a newcomer to UK energy market. They install smart meters as standard and use 100% green energy. They have a special economy 7 tariff that can be tailored to when you are at home most often.
  5. One Select is a new energy company in the UK market. They focus on fairness, simplicity, control and innovation. They have both fixed and variable tariffs.
  6. Outfox the Market have entered the UK market with their slogan “no frills, just low bills.” They charge a monthly membership fee based on how much electricity customers use over the course of a year rather than a standing charge and only have variable tariffs.
  7. Tonik Energy is a UK supplier that invests heavily in developing technology that will even further reduce your consumption and monthly spend. It is now growing in size after spending some years in the energy market.
  8. Pure Planet is a new energy company in the UK market by the team who founded Virgin Mobile. They claim to be an ethical energy company which uses 100% renewable energy and 100% carbon offset gas. They are an app only supplier and have a 0% markup on wholesale energy prices.

Which Company has the Cheapest Fixed Rate Tariff?

Standard variable TLI
Region Elec price per kWh Elec yearly price Standing Charge per day TCR Gas price per kWh Gas yearly price Standing Charge per day TCR
Avro Energy 11.708 362.95 17.85 13.81 2.993 374.13 17.85 14.17
Usio Energy 11.992 371.75 21.69 14.55 2.871 358.88 16.17 13.48
Utility Point 12.849 378.57 11.02 13.51 3.393 405.13 11.02 14.37
One Select 12.044 373.36 20.748 14.49 3.130 391.25 20.748 15.06
Tonik Energy 12.222 378.88 24.00 15.05 3.045 380.63 30.00 15.81

Last Updated: July 2018

From our calculations you can see that Avro Energy generally works out as the cheapest supplier on the market.

However, we have made these estimates based on a postcode in London. You must remember that the numbers will vary depending on your region so it is always best to do a comparison based on your postcode.

To compare them better and give you a real idea of what these tariffs would look like for real customers we did a quote for a family of four, living in a three-bedroom flat in London and paying for their energy bill with monthly direct debit.

  • Avro Energy
  • £867.30 per year
  • Usio Energy
  • £868.76 per year
  • Utility Point
  • £902.86 per year

Cheapest Electricity Supplier for Fixed Tariffs

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All of these companies have exceptionally low prices but most are relatively unknown and untested in terms of customer service.

If the bottom line for you is money then Avro Energy is clearly the winner. It also has good customer service with an overall rating on Trustpilot of 92%. You can check out our full review of Avro Energy.

Usio Energy also has good customer service reviews and could be an alternative if you prefer to use an app or do most of your communication online as the company has mostly online based customer service. Also, they are installing smart meters as standard for all new customers.

Utility Point at number three is probably a less reliable choice. It started off with fantastic customer service ratings as it has grown it has been going downhill. In fact, recently we have had many complaints from Utility Point customers claiming that they have been trying in excess of two hours to get through to a customer service agent. For the moment at least, we would recommend waiting to see if they can improve their standards before signing up for one of their tariffs.

One Select is another company that we would recommend avoiding at the moment. Customers have consistently complaining about the them online.

Finally, of all the companies Tonik Energy is probably one of the safest bets. It has been running a bit longer than the others and has a larger customer base. It has generally good customer service ratings as well.

Read our guide to the energy companies with the best customer service if you want to find out which companies came out on top for customer service.

Overall we’d say that depending on your preferences and the level of risk you would like to take with your supplier Avro Energy or Tonik are probably the best options for a cheap, but still reliable, supplier.

Which Company has the Cheapest Variable Tariff?

Standard variable TLI
Region Elec price per kWh Elec yearly price Standing Charge per day TCR Gas price per kWh Gas yearly price Standing Charge per day TCR
Usio Energy 11.992 371.75 21.69 14.55 2.853 356.63 16.17 13.41
Igloo Energy 12.004 372.12 21.00 14.48 2.74 342.50 21.00 13.52
Pure Planet 11.529 357.40 27.95 14.82 2.762 345.25 27.95 14.43
Outfox the Market 11.247 348.66 29.56 14.73 3.506 438.25 0.00 14.14
Utility Point 12.7764 396.07 11.02 14.07 3.3863 423.29 11.02 14.95

Last Updated: July 2018

The line up for cheapest variable tariff looks a little bit different, with companies who specialise in variable tariffs, such as Usio Energy and Outfox the Market in the top 5.

As you can see in this category Usio Energy has come out with the top prices - this time beating Utility Point to the post.

Second place Igloo Energy may be a better bet at the moment - with low prices and generally happy customers. Again, the company is so new it is difficult to tell what will happen with time but at least for the moment they are providing customer care so great that it matches their prices.

Again we have done a quick comparison of how these prices for the top three would look for our typical family living in London.

  • Usio Energy
  • £866.53 per year
  • Igloo Energy
  • £876.00 per year
  • Pure Planet
  • £888.00 per year

Cheapest Electricity Supplier for Variable Tariffs

cheapest energy company 2018

For variable tariffs our winner is Usio Energy.

Usio Energy is quite a unique supplier, claiming to base their variable rate on machine learning in order to save customers money. They use the readings from your smart meters to work out when you most use energy and use that information to try and save you money.

They are very cheap and have a 77% rating on the website Trustpilot meaning that their customers are generally happy with the service they provide. You can read our full review of Usio Energy to find out more about their customer service.

While Usio have the cheapest prices Igloo is definitely another contender, with really fantastic customer service reviews across the board.

All of our top three companies are really heavy on the online customer service. That means that communicating with them is easier by app, email or live chat. In fact, Pure Planet Energy doesn’t even have a contact phone number.

This is something that customers who are looking for cheap deals will have to accept as it is the way that the companies keep their prices so cheap.

You can find reviews of all the cheapest electricity suppliers on our energy providers pages.

Know How Your Energy Bill is Calculated

The Basics - Demystifying the Utility Bill

The electricity and gas bills that you pay for are made up of two different parts: standing charges and unit prices. This is true if you are on a variable tariff or on a fixed tariff. You have to look at BOTH the unit price and the standing charge to work out if you are getting the best deal on your electricity rates.

Unit Price

The unit price is the cost of the actual electricity that you use. It is measured in pence per kilowatt hour(kWh.)

This doesn’t mean how many kilowatts you use in an hour but rather the amount of energy you would use if you kept a 1000 kilowatt appliance running for an hour.

So, for example for Utility Point the unit rate of the electricity is 12.212p per kWh. That means that for every kWh you use you will spend 12.212p. The difference in kWh may just seem like a few pence but multiplied by thousands it can make a big difference to your energy bill.

It's still a bit abstract though. What can you actually do with 1kWh of energy in the real world?

Well, with 1kWh you can actually do quite a lot of things!

As you can see how much energy your items use depends on their wattage.

On average a family would use about 3,940kWh of electricity and about 12,000kWh of gas in a year. This is what we have based most of our calculations on.

How much you actually use will depend on a variety of different things: the size of your house, how well insulated your property is, how many people are living there and how much time they spend at home. However, when you want to switch supplier it is really important to check the unit rate in order to see if you are really getting cheap electricity.

Standing Charges

However, energy costs aren't just made up of unit rates. If standing charges are a mystery for you then you aren’t alone. Many customers fail to understand why If you aren’t using any electricity or gas then why do you have to pay?

Well, the standing charges on your energy bill cover the fixed costs of providing your home with both gas and electricity. Both your gas and electricity will have a seperate standing charge.

Again, we can use our Utility Point example. Utility Point's standing charge for the electricity is 11.02 per day and for the gas it is also 11.02p per day. That means in this case you would be paying 22.04p per day for your standing charges.

The standing charge is for things like keeping your home connected to the energy network, carrying out meter readings and transport costs. Part of it will also help pay for government initiatives such as the warm home discount and for programmes which help reduce carbon emissions and protect the environment.

energy contract and pen

The standing charges will vary depending on the energy company that you are with and also the region where you live. There are 13 different pricing regions in the UK and prices can vary quite dramatically whether you live in the North of Scotland or London.

There are some companies such as Ebico, Utilita and Npower who have tariffs that don’t have standing charges and can be useful for people who have holiday homes or properties which are vacant most of the time.

Fixed Rate Tariffs

What is a fixed rate tariff? Fixed rate tariffs aren’t a free for all buffet where you can use as much energy as you like. Fixed rate tariffs guarantee that the price you pay for your standing charges and unit rates will stay the same for the length of your contract - usually 12 or 24 months.

Will I have to pay a fee if I leave early? Some fixed tariffs will have an exit fee. This means that you will have to pay if you leave your contract early. However, with many new suppliers there are no exit fees and can leave any time you want. Even if your tariff has exit fees you are still free to leave in the last 49 days of your contract without paying the exit fees.

Advantages of fixed tariffs: Fixed tariff mean that you don’t have to worry about sudden increases in the price of your energy. Also, the majority of the the time fixed tariffs come out cheaper than variable tariffs.

Disadvantages of fixed tariffs: If the wholesale price of energy goes down while you are on your fixed tariff you won’t benefit from this price change. However, generally speaking this is very uncommon and most customers will be better off if they are on a fixed tariff.

Variable Tariffs

What is a variable tariff? A variable tariff has variable prices that can go up and down with the wholesale energy market. You may also see it referred to as your supplier's 'evergreen' tariff or standard variable tariff. There is a big difference in a company's standard variable tariff and those companies such as Bulb and Outfox the Market who specialise in variable tariffs. The standard variable tariffs are usually much more expensive.

Will I have to pay a fee if I leave early? No. Variable tariffs don’t usually have fixed contracts and they never have exit fees so you can leave whenever you like.

Advantages of variable tariffs: They are good for people who are quite energy savvy and who want to take advantage of the rise and fall of the energy market (much like the stock market.) They are also good for people who don’t want to be tied into a contract with exit fees.

Disadvantages of variable tariffs: The prices on the wholesale market can be volatile and you can expect that your monthly bill will increase and decrease, often dramatically. Many customers don’t like this uncertainty.

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