Have you felt the shock of opening your electricity bill soaring higher than expected? You’re not alone. Electricity cost in the UK ranks among the world’s most expensive – currently in third place. Historically, we have also been relying heavily on traditional fossil fuels, which adds another layer of uncertainty to the costs.
In this article, we will explain the average cost of electricity and how you can save money on your bill.
Quick Overview
The average UK electricity cost is 28.6p per kWh, applicable until the end of March 2024. The cost of electricity varies by region. The Warm Home Discount Scheme provides eligible households with a £150 discount on electricity bills until March 2024.
Key Facts & Figures
- The Energy Price Cap, for January 1 to March 31, 2024, sets the average annual electricity cost at £1,928.
- North Wales & Merseyside Region currently has the highest Average Single Rate Unit Price of 29.57p, with an Average Standing Charge of 62.21p.
- The average British household of 2.4 people per household uses around 2,700 kWh annually, resulting in an estimated average annual electricity cost of £996.
Average Electricity Cost UK
The average cost of electricity in the UK is typically calculated per kilowatt-hour (kWh), taking into account several factors such as wholesale energy prices, operational expenses for energy providers, and government regulations. One notable regulation affecting electricity prices is the Energy Price Cap (EPC).
As of January 1, 2024, the current EPC stands at £1,928 annually, effective until March 31, 2024. This translates to an electricity cost of 28.6p per kWh. Compared to the 2023 cap of £1,834, or 27.35p per kWh, this marks a noticeable increase.
It’s worth mentioning that the cap applies to the unit cost per kWh, rather than the overall cost. This means that households consuming more energy would surpass the capped amount. The primary aim of the price cap is to ensure fairness in pricing for consumers on default energy tariffs, keeping them in line with the actual energy costs.
However, it should be noted that this is an average figure. Electricity costs across the UK may vary by geographical region, Local supply and demand dynamics, distribution costs, and energy usage patterns cause the variation. This is especially true in colder areas where heating demands are higher.
Having a good understanding of these distinctions helps consumers make informed energy consumption and spending decisions.
Why Electricity Cost is High in the UK
When gas prices surge, electricity prices often rise as well. While it’s clear why gas prices affect heating costs, the connection to electricity might seem less straightforward.
However, electricity prices in the UK are influenced by carbon pricing mechanisms like the UK Emissions Trading Scheme and the Carbon Price Support. This means consumers pay carbon taxes on the electricity they use at home, unlike gas or oil for residential purposes, which aren’t subject to such taxes.
Another factor contributing to high electricity costs in the UK is a broken market. When wholesale costs surged in the past year, the smaller energy companies in the UK known for offering competitive prices, all shut down. This forced millions of customers onto the books of larger suppliers, resulting in higher bills.
While UK households are protected by a price cap, it’s adjusted every few months. This means that bills can increase rapidly in response to wholesale cost fluctuations.
UK Electricity Cost Factors to Consider
It wasn’t that long ago that two million UK households had to deal with electricity bill debt, so it’s clear that rising energy costs are a pressing concern for all of us. The last thing anyone wants is to find themselves burdened by ballooning expenses, especially when it comes to essential utilities like electricity.
Here are the key factors to consider in keeping electricity expenses manageable.
- Usage Patterns: The amount of electricity consumed directly impacts the bill. Your bill will increase as you use more energy. Using less energy will reduce your bill.
- Tariff Structure: Different energy suppliers offer various tariffs, including standard variable rates, fixed-rate tariffs, and time-of-use tariffs.
- Appliance Usage: Some appliances, such as heaters, air conditioners, and electric cookers, consume more electricity than others.
- Standby Power: Many electronic devices consume electricity even when not in use.
- Seasonal Variations: Electricity usage tends to fluctuate seasonally, with higher demand during the colder months for heating and warmer months for cooling.
- Regional Differences: Electricity prices may vary by region due to factors such as distribution costs, infrastructure, and local regulations.
Taking proactive steps to understand and manage electricity costs in the home can make it easier to avoid falling into the trap of accumulating debt and instead maintain control over your finances.
How to Cut Electricity Costs
Even the smallest adjustments to your daily habits can make a difference in lessening your household bills. Listed below are numerous strategies available to help lessen the burden of high electricity costs.
Switch to Energy-Efficient Appliances
Upgrading to energy-efficient appliances can significantly reduce electricity consumption. Look for the Energy Labels on everyday appliances like refrigerators, washing machines, dishwashers, and TVs.
Appliances are rated from “A to G” on the energy scale, with “A” giving them the best rating and “G” giving them the worst rating. A washing machine rated A could cost you less than a washing machine rated D over its 11-year lifespan, saving you £110 (105kgCO2e).
Unplug Electronics When Not in Use
Many electronic devices continue to draw power even when turned off, contributing to “phantom” or standby power usage. Unplugging devices or using power strips with surge protectors can prevent this standby power drain and lower electricity bills.
Adjust Thermostat Settings
Heating and cooling account for a significant portion of household energy consumption. Adjusting thermostat settings by a few degrees can lead to noticeable savings.
During colder months, lowering the thermostat by just one degree Celsius can reduce heating costs without compromising comfort.
Improve Home Insulation
Proper insulation helps retain heat during winter and keeps the home cool during summer, reducing the need for heating and cooling appliances.
Insulating attics, walls, and floors, as well as sealing gaps and cracks, can improve energy efficiency and lower electricity bills.
Use Appliances Wisely
Being mindful of how and when you use appliances can also contribute to savings.
For example, washing clothes in cold water instead of hot, air-drying laundry instead of using a dryer, and running dishwashers and washing machines with full loads can all help reduce electricity consumption.
Install Smart Technology
Investing in smart thermostats, smart plugs, and energy monitoring devices can provide insights into electricity usage and enable more efficient management.
Smart thermostats can automatically adjust heating and cooling settings based on occupancy and preferences, optimizing energy usage.
Take Advantage of Government Assistance
The UK government offers assistance programs to help households manage energy costs.
Eligible individuals may qualify for the Warm Home Discount Scheme, which provides a £150 discount on electricity bills for the winter season until March 2024. To qualify, you must either receive the Guarantee Credit element of Pension Credit or be in a low-income household.
By implementing these strategies and taking advantage of available resources, households can effectively reduce electricity costs and even have some left over for a bit of pampering.
Final Thoughts
As we can see, managing the UK electricity cost is about maintaining a sustainable lifestyle. Managing your expenses effectively also demands a solid budget. Creating one tailored to your household’s needs puts you in the driver’s seat, giving you the power to track your spending across the board and spot opportunities to save.
With savvy budgeting alongside energy-saving strategies, you’re equipped to tackle the challenges of energy costs head-on while keeping your finances on track.
