How much will my energy bills cost? Use our energy calculator to find out

How much will my energy bills cost is a question millions of people are worrying about in the wake of the energy crisis and the soaring price of gas. But now that a new energy price cap has been announced, what does this mean for our bills for the start of 2024?

Since it's introduction in 2019, the energy price cap has been set by energy regulator Ofgem. But the cap got so high during the energy crisis, that the government intervened and introduced the Energy Price Guarantee to limit typical bills at £2,500 a year. This scheme ended on 30 June, when the price cap fell below the price guarantee. The cap dropped again in October, and Ofgem has just announced that the price cap will rise slightly from January 2024, due to an increase in wholesale costs.

How much will my energy bills cost?

For the rest of 2023, average energy bills (based on typical use) will be capped at £1,834. But from January 2024, this will rise by £94 to £1,928. This applies to bills paid by direct debit in England, Scotland and Wales. Energy is regulated separately in Northern Ireland. Those who pay by cash or cheque, or have a prepayment meter will pay slightly more, due to the higher cost to the energy company to service them. 

But remember that the figure stated in the price guarantee is not a maximum you will ever pay. It is based on typical use in a typical house. If you use more energy than 'typical' then you can expect to pay more. 

Under the current energy price cap, which is in place for the rest of 2023, the average price you pay per unit (kilowatt hour or kWh) of electricity is capped at 27p for electricity and 7p for gas. From January 2024, these will rise to about 29p for electricity and about 7.5p for gas. These are average unit prices. The unit rate itself varies depending on where you live. The full list of rates have been passed to suppliers to ensure that they are used to calculate bills in Great Britain. 

You can use our calculator to see what impact further changes in the energy price cap will have on your bills. You can also check out our guide if you need your energy bills explained to help you understand them better.

While the energy price cap has risen slightly, it is still much higher than it was before the energy crisis, so energy bills still might be unaffordable for low income families. But there are measures you can take to make sure your energy bills are as low as possible. 

Joanna O’Loan, Knowledge Manager at Energy Saving Trust, says: “Whatever your budget, there are actions you can take that can help you save money on your heating costs this winter. Quick, low and no cost measures such as blocking up draughts or turning down your thermostat can help you start making savings immediately. If you’re able to invest, measures such as  improving your home’s insulation will help you make significant financial and carbon emission savings over coming years too.”

If you are struggling with high energy bills, extra support might be available to you. In his Autumn Statement 2022, Jeremy Hunt announced that further support would be given to those most vulnerable, including a £900 cost of living payment for those who receive means-tested benefits. The final instalment is due in spring 2024.

Important terminology explained

• Energy price cap: often expressed as an annual figure that a 'typical household' would pay for their energy, the price cap actually puts a limit on the price you pay per unit of gas and electricity. It's set by the energy regulator Ofgem to ensure families pay a fair price for their energy
• Energy Price Guarantee: this was a temporary price cap that was introduced by the government when Ofgem's price cap got so high at the height of the energy crisis. It was introduced in October 2022 and ended at the end of June 2023. 
• Prepayment meter: this is type of energy meter where gas and electric needs to be paid for in advance of using it, rather than a standard meter where families pay for their usage afterwards.
• Ofgem: This is the energy regulator. Ofgem are responsible for setting the energy price cap, which is reviewed every three months. 
• Fixed energy tariffs: A fixed energy tariff is where the price you pay per unit of gas or electricity is fixed for a specific term, which could be one or two years. Those who have fixed their energy prices will be unaffected by changes in the energy price cap for the duration of their fixed tariff.
• Cost of living payments: Low income households and those who receive certain benefits are eligible for additional financial support from the government in the form of cost of living payments. For the 2023/24 tax year, qualifying individuals will receive up to £900 support that does not need to be repaid.

How can I reduce how much my energy bills will cost?

Normally, the best way to tackle rising energy prices is to switch to a cheaper deal. Amid the height of the energy crisis, many suppliers raised the costs of their tariffs. This meant there weren’t really any cheap deals to be found. Now the price cap is stabilising, suppliers are sporadically starting to offer deals cheaper than the price cap, (you can find the latest deals on our sister site Go.Compare). 

But money saving expert Martin Lewis has flagged that households should be careful before committing to a fixed tariff, as it might not actually work out cheaper. 

Reduce how much energy you use

While switching to a different provider won't help you to reduce your energy bills right now, the key move is to reduce how much energy you use at home. There are simple and inexpensive methods you can adopt. You could even consider some options which may involve a short-term cost now with the promise of long-term savings in the future. 

Energy-saving measures you could try include:

• Turning off any appliances left on stand-by mode
• Using eco modes on any wet appliances, such as dishwashers and washing machines
• Drying clothes outside or on an airer instead of using a tumble dryer
• Swapping older incandescent light bulbs to energy-saving alternatives
• Draught proofing
• Choosing the most energy-efficient models you can when purchasing new appliances.

Know how much energy your appliances use

It will also be helpful to understand how much your most often used appliances cost to run so you know which are using the most energy and could be used less. When it comes to how much a tumble dryer costs to run or how much it costs to run a washing machine, these are likely to be some of the most energy hungry appliances in your home as they provide both heat and movement. 

But it's worth also understanding how much it costs to run an air fryer and if it's cheaper than an oven, or how much it costs to run an electric blanket so you can make smart choices about when and how much you use them.

Check your tariff and any grants you might qualify for

You might also find that there is a tariff that allows you to benefit from electricity being cheaper at night, and that may work for some people, although it's important to note that if you are on this kind of tariff, any energy you use at peak times is likely to be more expensive than other tariffs. 

You may also be eligible for a grant from the government for improvements to make your home more energy-efficient. This might be loft or wall insulation or even a new boiler. 

You could also check to see if you qualify for free gas and electric vouchers.

Useful tips

If you are struggling to pay your energy bills, speak to your provider in the first instance and see if they can help. You might be able to arrange an alternative payment plan or qualify for support to help reduce your bills. 

How to switch energy suppliers

If you find a good energy deal that is substantially lower than the energy price cap, then it's worth knowing how to switch energy suppliers. And the good news is, it's relatively straightforward. 

1. First you should use a price comparison site, such as Go.Compare, to compare available tariffs to make sure you are getting a good price. Sometimes price comparison websites have exclusive deals so they are worth checking out
2. You can always contact potential suppliers if you have any questions or need more information. It's good to do this before you commit to a new supplier
3. Once you're happy, you can sign up to your chosen tariff by following the instructions on the price comparison site, or the suppliers own website
4. You don't need to inform your current supplier that you're leaving, your new supplier should take care of this for you
5. Take a meter reading on the day of the switch over to ensure accurate bills.

What is the average UK energy bill?

Your energy bill will depend on multiple factors. These include your location, the tariff you’re on, the type of meter you have, how many people there are in your household, how energy efficient your home is and how you pay your bill. But understanding the average gas and electricity bills in the UK can be a useful benchmark.

Average electric bill

According to Ofgem, the average household of 2.4 people uses 2,700kWh (kilowatt hours) of electricity each year.

Until the end of December, when the unit rate for electricity is 27p/kWh, the average bill will be be £729, or £60.75 per month, with a daily standing charge of 53p per day on top. 

From January 2024, the price will increase to about 29p (28.62p), which means an annual cost of £772.74, or £64.40 per month, with an additional daily standing charge of 53.4p per day. 

Average gas bill

When it comes to the average gas bill, the average UK household uses 11,500kWh of gas every year at an average cost of 7p/kWh, so you can expect to pay £805 per year or £67.08 per month, with a 30p daily standing charge on top. 

When the January cap comes into force, the unit cost will rise to about 7.5p (7.42p), meaning an annual cost of £853.30 per year, or £71.10 per month, with a daily standing charge of 29.6p on top. 

How much you actually pay will ultimately depend on where you live and how much energy you use. You will likely find that you spend less in the summer as you don't need your heating on and you don't need to have your lights on as much, but more in winter when the nights draw in and temperatures drop.

It can be confusing to understand what the energy price cap means and whether you should fix your energy prices or not. If you have specific questions about your bill or are struggling to pay, speak to your energy provider as soon as possible. 

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