How to Compare Electricity Prices & Save £££s
There are a multitude of electricity suppliers in the UK offering numerous variable and fixed-rate tariffs. With all these home energy options, it can be a bit overwhelming to try to compare electricity prices by yourself.
To help you out, we explain how to understand your energy bill and know what to look for in terms of unit rate, standing charges, billing options and exit fees, making it easier to know how to get the best deal on your electricity and start saving today.
Understand your electricity bill
Switching your energy tariff is a surefire way to save you money and a quick and simple process if you know what to look for. It’s important to understand terms such as ‘unit rate’ and ‘standing charge’ to ensure you’re getting the best deal possible. Let’s take a look at what these mean before comparing some of the electricity tariffs on the market today.
1. Unit Rate: the price of electricity
The unit rate refers to how much each kilowatt-hour (kWh) of energy will cost you. This is what makes up the biggest part of your electricity costs. The unit rate remains the same for the duration of a fixed-price contract, though will fluctuate according to wholesale electricity prices on a variable tariff.
What’s a kilowatt-hour?Electricity units are measured in kilowatt-hours (kWh) - that’s one kilowatt of electricity being used over an hour. You can often find how much energy an electrical household appliance uses in watts on its packaging.
2. Standing Charge: a residential delivery fee
The standing charge is a fixed price charge that is added to your bill to cover costs such as:
- Keeping your house connected to your Distribution Network Operator
- Carrying out meter readings
- Infrastructure maintenance
- Contributions to government initiatives and energy schemes
This cost is usually displayed on your quote as ‘per day’ in pence and remains the same for the duration of your contract.
£0 Standing Charge?
Some tariffs claim to offer no standing charge, but it would be wise to be wary of these. Generally, if an energy supplier offers no standing charge, its energy unit rate is much higher in cost than the average.
However, if you have a property that is uninhabited for much of the year, this may be something to consider, as you will only be charged based on how much energy you are actually using.
3. Exit Fees
Contract lengths generally only apply to fixed-term tariffs. Technically, you do not have to fulfil your contract until the agreed termination date, however, failing to do so can incur an exit fee.
In most cases, if you wish to change providers or tariffs before the end of your term, you will have to pay a predetermined exit fee, usually in the range of £5 to £30, though this varies between suppliers.
There are some fixed-rate tariffs available in the electricity market that do offer the possibility to leave without having to pay an exit fee.
All electricity costs, discounts and incentives are subject to a standard VAT rate of 5%.
Paying your electricity bill
There are generally three options when choosing your payment method:
- Direct debit
- Cash or cheque
- Pay as You Go
Each of these has its own benefits. However, we recommend that for the majority of customers direct debit is the way to go. Not only is it more convenient, but most suppliers will even offer a discount for those who pay using this method.
How to compare electricity prices yourself
Now we know what charges our bill is made up of, we can begin to compare electricity tariffs by price. To get a better idea of annual costs, it's good to know your average electricity usage. We also recommend using our handy energy consumption tool to get an accurate estimate of how much electricity you use.
Below we have included the most recent average electricity consumption figures released by Ofgem.
|Fuel||Level of consumption||Consumption|
|Electricity||Low (1-2 bedrooms/flat)||1,800 kWh|
|Medium (3-4 bedrooms)||2,900 kWh|
|High (5+ bedrooms)||4,300 kWh|
To get our final annual electricity price, we need to include:
- Unit rate
- Standing charge
- VAT (5%)
Below, we’ve calculated a fixed price electricity tariff for a 3-4 bedroom home with a unit rate of 17.604p per kWh and a standing charge of 23.72p per day. We’ve also included the standard 5% rate of VAT that applies to energy costs.
|Unit rate||£0.17604 x 2,900 = £510.516|
|Standing charge||£0.2372 x 365 = £86.578|
|Total electricity used in this period||£597.10|
|VAT of 5%||£29.86|
|Annual electricity price||£626.96*|
*Final costs are rounded.
Adding up to a whopping £626.96, we’re clearly paying far too much on this plan. This time, let’s try a different tariff with the following conditions:
- Unit rate: 15.64p per kWh
- Standing charge: 19.32p per day
|Unit rate||£0.1564 x 2,900 = £453.56|
|Standing charge||£0.1932 x 365 = £70.518|
|Total electricity used in this period||£524.08|
|VAT of 5%||£26.20|
|Annual electricity price||£550.28*|
*Final costs are rounded.
As you can see, in this instance we could save £77 a year just by switching electricity suppliers. In other cases you may even be able to save much more, depending on the type of tariff you’re currently on.
Switch electricity tariffs the easy way
Once you’ve been able to compare electricity tariffs and select the one that suits you best, it’s time to switch your provider.
Armed with just a few details about yourself, your home and a rough idea of your energy consumption, you can contact your chosen provider’s customer service or make the switch through a third-party service.
- What details do I need when calling to compare electricity prices?
- The name of your current supplier and tariff
- Your average monthly or annual energy consumption in kWh or pounds
- Your contract end date You can find all of this information on your latest bill or through your current energy supplier’s online portal.
What do I need to do next?
If you like the sound of a tariff on offer, you’ll be set up with a switching date. Your new supplier will take care of just about everything to do with the changeover from your current electricity provider.
You won’t need to install any new equipment, unless you’re moving from a prepayment meter to a direct debit tariff or vice-versa, or if you’re having a smart meter installed. This is usually covered by your new energy supplier and won’t cost you a penny. All that’s left to do is put your feet up and watch the savings roll in!
How long will it take to switch over?
Your switch will take no more than 21 days, including a 14-day cooling-off period. During these 14 days, you’re free to cancel the switch and stay with your current supplier if you change your mind.
What types of electricity tariffs are on offer?
The two principal tariff types offered by energy providers are fixed-rate and variable.
Variable tariffs will adjust according to the wholesale price of electricity. This means your bill could get cheaper, though it's more likely to increase over time.
If you’re on a fixed tariff the price of electricity per kWh will not change for your contracted duration, leaving you safe in the knowledge that your bills are not going to soar at any given moment.
Dual fuel: electricity and gas together
A dual fuel tariff is a plan where both your gas and electricity are supplied by the same energy provider. This means just one bill to pay for both types of fuel, with many suppliers offering discounts for signing up for both fuels.
With climate change increasingly playing a part in our choices as consumers, green energy tariffs offer the eco-conscious customer peace of mind that they’re doing their bit for the environment by using energy from renewable sources, such as wind, solar power and hydropower.
Green tariffs have previously been more expensive than those that rely on dirty fossil fuels, though this is rapidly changing, with many providers offering renewable electricity plans at the same price - or even cheaper in some cases.
Customers on prepayment electricity tariffs pay for their energy ahead of time, much like a pay-as-you-go mobile phone. Prepayment tariffs use a special kind of meter that is topped up by key, card, token or online for those with a smart prepayment meter.
Prepayment electricity tariffs are generally among the most expensive, though they could be a good option for those who like to set a weekly budget and pay for their energy bills in advance.
Economy 7 and Economy 10: off-peak electricity
Economy 7 and Economy 10 are electricity tariffs that have a cheaper off-peak rate at night and a more expensive rate during the daytime. This may suit those who use storage heaters which charge overnight.
Both Economy 7 and Economy 10 require installing a differential rate meter which offers two electricity prices. Although Economy 7 and Economy 10 meters are rapidly becoming a relic of the past, you can still find tariffs with a limited number of suppliers, on both prepayment and direct debit options.