Cheapest electricity supplier: compare prices & save
With so many different options, it can be quite difficult to distinguish which is actually the cheapest electricity supplier in the UK. We’ve analysed electricity providers across the country to help you find the best deal for your home.
There are currently around 50 electricity suppliers in the UK. Many of them claim to be the cheapest electricity supplier in the country, but that position can only be held by one provider.
In this guide, we break down how to calculate your electricity bill so that you can compare different tariffs and find the best electricity deals in your area.
We also list the cheapest electricity providers and their best offers that are currently on the market and look at how suppliers rank for customer satisfaction.
Understanding your electricity bill
We know it can be intimidating trying to understand how your electricity bill is calculated, but it’s actually not as complicated as some energy providers would like you to think it is.
There are just a few components that make up your electricity bill. Let’s first take a look at the different types of tariffs, then we will explain the factors that make up the price.
Types of electricity tariffs
We break down the main types of electricity tariffs. It’s important to understand the different types of tariffs so that you can select the type that best suits your electricity needs.
- Variable tariffs
- Fixed tariffs
- Economy 7 tariffs
Variable tariffs do not have fixed rates. The rates can fluctuate with the wholesale price of energy. This means that the cheapest variable tariff today may not be the cheapest one tomorrow if the price increases.
In general, variable tariffs do not have exit fees. Customers are able to change to a different tariff if they find a cheaper option without being penalised for terminating the agreement.
If your electricity is on a fixed-rate tariff, it is guaranteed that the rates will not change for the length of the agreement. We recommend going on a fixed tariff in order to ensure that the price you pay does not increase.
Most fixed-rate tariffs have exit fees. This fee is usually around £30 per fuel, but can also be more or less expensive. If you decide to cancel your tariff agreement and move to a cheaper electricity supplier, you will have to pay a fee.
This type of tariff has different rates for on and off-peak hours. In exchange for paying a higher price for electricity during the day, customers can get cheaper rates for seven hours at night.
Economy 7 tariffs can have either a variable or a fixed rate. We only recommend signing up for this type of tariff if you use electric storage heaters to heat your home.
What costs make up my electricity bill?
Your electricity bill generally consists of three different charges. The type of tariff you are on influences how these prices fluctuate.
- Electricity standing charge
- Electricity unit rate
The standing charge is the price you pay per day just to be connected to the electricity supply. Some energy companies do not charge this fee. However, these are unlikely to be among the cheapest electricity tariffs overall because in exchange for not having to pay a standing charge, you’ll usually be charged a more expensive unit rate.
The unit rate is what you pay for the electricity that you actually use. It is measured in pence per kilowatt-hour (kWh). For Economy 7 tariffs, consumers have two different unit rates - one for the day and one for the night.
Electricity is taxed at a rate of 5% for domestic customers. Remember to always check if the VAT has been included in the offer when comparing electricity tariffs.
How do I calculate my electricity bill?
Now that you understand what makes up your electricity bill, let’s see how to calculate the total cost of the bill. This will allow you to compare offers so that you can determine which is actually the cheapest electricity supplier.
Take a look at your latest electricity bill to find out your individual household’s yearly electricity usage. If you don’t know how much electricity your home consumes, try using our consumption calculator.
Multiply the tariff’s unit rate by the amount of kWh of electricity that you consume annually. Then multiply the daily standing charge by 365 days in a year. Add these two products together to find the projected electricity spend per year.
Calculating your electricity bill: an example
If your household consumes 3,100 kWh of electricity annually, how much will you spend per year if your tariff's unit rate is 15p per kWh and your standing charge is 23p per day? The VAT is already included.
Answer: (0.15 x 3,100) + (0.23 x 365) = 548.95 pounds per year
If the rates do not include the VAT, remember to multiply the total by 1.05 to find the price you will actually have to pay.
Who is the cheapest electricity supplier?
Unfortunately, determining the cheapest electricity supplier is not so simple. Not only does your location influence what you pay for electricity, but with constantly changing variable tariffs, as well as the introduction of new tariffs, the cheapest electricity supplier today may not be the cheapest one next month.
If your home is connected to the national gas distribution network, we recommend comparing dual-fuel tariffs. It’s not only convenient to have your gas and electricity supplied by the same provider, but some suppliers even give customers an additional discount for registering both fuels.
Cheapest deal for prepayment customers
Unfortunately, prepayment customers almost always end up spending more money on electricity than customers who pay via direct debit or on receipt of a bill.
If you have a traditional prepayment meter and want to switch to a credit or smart meter, you may need to have a new meter installed in order to go on a direct debit tariff. You should contact your energy provider and request to book an appointment to have this done.
If you are a pay-as-you-go customer with a smart meter, you just need to contact your current provider and ask to have your meter put in credit mode to switch your payment method to direct debit. This can be done quickly and easily without an engineer having to come out to your home.
Can I change to the cheapest electricity supplier if I am in debt? If you are currently in less than £500 debt per fuel with your prepayment electricity provider, you may still be able to change to a different supplier. Contact your provider and ask to set up a repayment plan for the debt. You will then be able to switch to another supplier.
Is the cheapest the best option?
Choosing an electricity provider should not just be about which one offers the cheapest price. It’s also about the quality of the company and its service. Having your electricity supplied by the cheapest electricity supplier may not be worth the hassle of dealing with an unstable company or low-quality customer service.
When it comes to choosing the best electricity supplier for your home, here at Selectra we recommend considering all aspects of the service, rather than just focusing on which company offers the cheapest price.