Average bills are dependent on a number of factors. For example, how big your home is and which you fuel you use to heat it will have a huge impact.
When we hear news headlines that mention the ‘rising cost of living’, gas and electricity bills are a big chunk of those costs. From 2018 to 2019 consumers saw a typical rise of around 6% on annual bills. If we look back over the last 10 years there have been small dips in average costs but the overall trend is upwards.
The latest figures show an average combined gas and electricity bill of £1289 annually. This figure does not take into account any variables so to check your bill against the average, you need a little more information.
For a medium sized 3-bedroom home, the average is a little lower than the national average- £1163. A five bedroomed, large home is £1639. A small house or flat averages £784. Of course, this will all depend on your typical usage and how well insulated your home is.
With annual bills generally trending higher each year, you may expect that to be reflected in our energy use. However, this is not the case as over the last 10 years domestic energy use has been falling. A big reason for this is due to rising prices but better insulated homes and warmer winters have also played a part.
If our energy use is falling, why are prices rising?
This is a complex subject and not simply down to energy suppliers trying to rip us off. The biggest factor behind the rises comes down to the wholesale energy costs. Over 30% of your bill is calculated from wholesale costs. These, as you might have already guessed, have been rising consistently. The wholesale energy costs are the price your supplier pays to buy the energy that you use. It is therefore easy to see that if this cost rises, so will your bills.
Operating overheads have also been rising over the last few years. The rollout of smart meters has had a big impact on this. Although they may be advertised as ‘free’ for the consumer, that tag is more than just a little misleading. You will not be charged an upfront fee for the installation of a smart gas and electricity meter, but it is calculated into your bill.
Up to 25% of your bill will be calculated from network operating costs. When gas lines need to be replaced or electricity supplies are cut, somebody needs to foot the bill to get things up and running again. That somebody is you, the bill payer.
Another big contributor to your bill is taxes. The government levies will add more onto the cost of your bill. Recent ‘green’ initiatives have seen an upward ‘bump’ in prices recently, which shows that government policy can have an instant impact on bills.
Can where I live impact my bills?
Network costs and even the wholesale price of gas and electricity can be different, depending on where you live. For example, the average electricity costs in England and Wales stands at £682. In Scotland consumers pay a slightly higher annual bill of £688. It is the opposite for gas supply with England and Wales paying £610 on average and Scotland paying £605.
UK wide breakdown of averages
The annual averages across the UK:
Electricity – up to 2 bedrooms (1800KWh per year) – £403.
Up to 4 bedrooms (2900KWh per year) – £590.
5 and above bedrooms (4300KWh per year) – £846.
Gas – up to 2 bedrooms (8000KWh per year) – £392.
Up to 4 bedrooms (12000KWh per year) – £572.
5 and above bedrooms (17000KWh per year) – £793.
As you can see, gas is significantly cheaper than electricity. If you get both gas and electricity from the same supplier (dual fuel), you should find that your bills are slightly lower:
up to 2 bedrooms (9800KWh per year) – £795.
Up to 4 bedrooms (14900KWh per year) – £1163.
5 and above bedrooms (21300KWh per year) – £1639.
How can I keep my bills as low as possible?
The number one way to keep bills down is to keep a close eye on your current contract. When it is up for renewal or no longer providing you with the best deal, it is time to switch. Switching suppliers regularly is the best way to make sure that you are on the most competitive tariff.
Check your tariff. Are you on the most suitable tariff for your needs? A good fixed tariff in the UK will cost £783 annually. A similar variable tariff is much higher at £1125.
Making energy saving improvements around the home can have a big impact on bills. Now is a great time to consider home insulation, solar panels or heat pumps due to some government incentives. Green deal offers can provide households with up to £10,000 in vouchers towards such work.
Remember the basics. Shut doors around the home and turn off lights and appliances when they are not in use. Consider changing to energy efficient light bulbs and only boil as much water as you need in the kettle.