What is the average gas and electricity bill in the UK?

No one wants to pay more than they have to for energy, but how do you know you’re getting a good deal? Data published by Ofgem, the energy regulator, shows that in May 2021 the average UK energy bill was £1,131 a year. But are average bills really all that helpful?

To help you understand average electricity and gas bills and what they might mean to you, we’ll show you some examples, explain what they’re based on and why they change.

Do you already know your bills are higher than they should be? View our tariffs and see if you could save.

Average energy bill by house size

One of the main things that impacts your energy bill is the size of your home. We’ve pulled out some handy examples of average bills for small, medium and large homes, based on having both fuels with the same supplier (it’s usually cheaper). Things like your energy use habits and where you live will make a difference as well, so this is just a rough guide.

Small house/flat – 1 -2 bedrooms

A small to medium sized house or flat, with 1 or 2 bedrooms and 3 to 4 people, would use around 8000kWh of gas per year, and 2000kWh of electricity.

This would mean an average monthly energy bill of £66, or £795 a year.

 

Medium house - 3-bedroom house

If your house is a little bigger, say 3 bedrooms and 3 – 4 people, your usage might be more like 12,500kWh of gas per year, and 3100kWh of electricity.

This would mean an average monthly energy bill of £97 per month, or £1,163 a year.

 

Large house – 4 or more bedrooms

For a bigger house with 4 or more bedrooms and 5 people, the average would be around 18,000kWh of gas per year, and 4,600kWh of electricity

This would mean an average monthly energy bill of £137 per month, or £1,639 a year.

What affects average energy bills?

It’s not just property size that affects your energy bills. Where you live, how well insulated your house is and how efficient your home appliances are will all impact how much energy you use to keep your home ticking over.

The type of tariff you’re on, and how you pay for your energy also makes a difference. If you haven't signed up to a fixed tariff, you might be on a Standard Variable tariff (SVT) which is usually more expensive.

 

How do we calculate energy bills

Your energy use is obviously the most important part of your bill. Your energy provider charges for each unit, or kilowatt hour (kWh), of energy you use, so the more you use, the more you pay. Don't know what's watt? Find out more about kilowatts and kilowatt hours on our handy blog. There’s a lot more to your bills though.

The wholesale costs of gas and electricity make up just under 40% of your energy bill. That’s what it costs your supplier to buy the energy you use. These prices can change from day to day and have gone up a lot recently. We’ll go into that in more detail later…

Network costs are next, making up about a quarter of your bill. These costs are set by the distribution network in your region and cover the use and maintenance of the energy network (aka the pipes and wires that get the gas and electricity to your home). Want to know more? Find out which network you’re on.

Operating costs make up about another 18% of your bill – this is the day-to-day expenses each energy company has to cover.

Energy companies are also obligated under government programs to save energy and lower emissions. The cost of these schemes is passed onto customers and adds about 13% to energy bills.

Finally, there’s VAT (Value Added Tax), profit margins and other costs that make up the remainder of your bill.

Why have energy bills increased?

The biggest thing driving up energy bills in the last few years is the wholesale cost of energy. Suppliers are having to spend more on the energy they sell to consumers. For example, between 2006 and 2016 gas prices increased by 46% and electricity prices increased by 28%. Overall that’s an increase from £1,081 to £1,123 a year.

Energy prices were also impacted by the Covid-19 pandemic in 2020 - home energy use was higher than ever during lockdown with so many people working from home. Then came a colder than average winter and spring, meaning we were heating our homes much later in the year than usual, and there was stiff competition. Britain had to import more energy than planned to meet demand, and the same thing happened across most of Europe and Asia. So when demand increased, so did prices.

It’s not just wholesale prices that are rising though. Network and operating costs, and the impact of government environmental programs have all contributed to an increase in energy bills.

Average gas and electricity bills have increased

Energy use across Britain has actually gone down over the years (about 12% since 2000). That's partly due to home appliances getting more efficient, but the drop in energy use can also be linked to rising energy costs. If you're looking to save on your energy bills one thing you can do is try to use less energy. Check out our top energy saving tips.

 

Are energy prices different in other parts of the UK?

Different parts of the UK have different distribution network companies, and they don’t all charge the same price to use and maintain the energy network. For example, Merseyside and the South of Wales have some of the highest energy prices because their distribution network charges are higher.

There’s not much you can do about these charges as it boils down to your postcode, but you can make sure you’re on the best tariff for you. Changing your tariff could save you money, time and hassle.

 

Why are average energy prices higher in the winter?

The other big thing impacting average bills? Seasons! In winter your energy bills will go up as you’ll use more energy to heat your home. You might even use more energy from cooking than you would in summer – roast dinner anyone?

If the winter is particularly harsh, the cost of energy goes up too. In 2018 when ‘The Beast from the East’ blanketed the UK in snow, average energy costs rose by up to five times. Massively increased energy use meant demand was at an all time high. Many suppliers had to buy more energy than they’d planned to, which came at a cost.

The good news is there are some simple ways you can be energy efficient this winter, just in case The Beast comes back. Find out how to keep warm in winter without costing the earth.

How to keep your energy costs down

If you're worried about your bills creeping up we’ve got some tips and tricks to help you lower your bills.

Do you know what kWh are?

Looking to add to your knowledge understanding what kWh are and how they are calculated will further help you understand how energy bills are calculated.

Easy tips to reduce energy at home

Read our easy tips to help you and your family reduce your energy use in every room of your home. 

Top ways to save on energy bills this winter

There are lots of ways to save on energy bills without having to compromise on comfort. Read our top tips on how you could save on energy bills at home today.