As we head further into 2023, the cost of living in the UK continues to rise, with the average gas and electricity bill being a significant contributor to household expenses. With energy prices increasing year on year, it’s important to understand how much you might be paying for your energy bills in the coming year.
In this blog, we will take a closer look at the average gas and electricity bills in the UK for 2023, exploring the factors that influence these costs and offering practical advice on how to reduce your energy consumption and save money on your bills.
Whether you’re a homeowner or a tenant, this blog will provide you with the information you need to manage your energy bills effectively and keep your household expenses under control.
The factors that affect your energy bills in the UK
There are several factors that influence the cost of energy bills in the UK. Here are some of the most important variables:
- Your home size – the size of your home and the number of rooms etc can make a huge difference with the energy it needs to keep it running.
- The energy efficiency of your home – generally speaking, new builds are more energy efficient than older homes.
- The number of people who live in your home – as you can imagine, if more people live in your home, you’ll pay more on energy bills.
- The energy efficiency of your appliances and how often you use them
- Health conditions – if you or someone in your household has a health condition that requires additional heating, this can increase your energy bills. Equally, some people rely on medical devices and equipment which use lots of electricity.
- Lifestyle – such as whether you work from home or have children in the house.
Other factors that affect the energy bills are; - Wholesale energy prices – The cost of energy on the wholesale market is a significant factor that influences the price of gas and electricity bills. If wholesale prices increase, energy suppliers will typically pass on those costs to their customers.
- Distribution and transmission costs – The cost of delivering energy to households is also a factor that influences energy bills. These costs are determined by the infrastructure required to deliver gas and electricity to homes, including the cost of maintaining and upgrading this infrastructure.
- Government policies and regulations – Government policies, such as environmental taxes and subsidies for renewable energy, can also influence the cost of energy bills.
- Weather – Weather patterns can also have an impact on energy bills, particularly for heating costs. Colder winters can lead to higher gas bills as households use more energy to keep their homes warm.
Understanding these factors is important for managing energy bills effectively and finding ways to reduce energy consumption and costs.
By taking active steps to increase energy efficiency and exploring alternative energy sources, you can reduce your energy bills and make your home more environmentally friendly.
Ofgem, the UK’s independent energy regulator, estimates the typical household in Britain uses 2,900 kWh of electricity and 12,000 kWh of gas in a year. Let’s take a closer look at these numbers and tie them in with the average household energy bill, as well as find out what the figures mean in practice.
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The average energy bill cost in 2023
In 2023, the average annual energy bill for a medium-sized home (2-3 people) is estimated to be around £2,500 for households that use both gas and electricity and pay with direct debit. However, the government’s £400 energy bill discount brings the average cost down to £2,100. When you break that annual cost down, it means that the average energy bill will cost £175 a month.
Keep in mind that the cost of your energy bill will vary based on several factors such as the type and location of your property, heating system, energy efficiency, number of occupants, your personal usage habits and lifestyle.
The average electricity bill cost in 2023
The average electricity bill in the UK varies depending on several factors, such as the size of the property, the number of occupants, and their energy consumption habits.
The estimated annual electricity bill for a medium-sized household (for a 3-bedroom house) in the UK is around £1,156.27, which works out at approximately £96.36 per month. However, it’s important to note that this is only an average, and actual electricity bills can be significantly higher or lower depending on your circumstances.
The average gas bill cost in 2023
The estimated annual gas bill for a medium-sized home with three bedrooms is around £1,345.96 – this works out to an average of approximately £112.16 per month. These figures can change based on gas prices and other factors.
How is my energy bill calculated?
Your energy bill is typically calculated based on the amount of gas and electricity you use, measured in kilowatt-hours (kWh), multiplied by the unit rate charged by your energy supplier. The unit rate is the price you pay per kWh of energy consumed and is set by your energy supplier.
Your energy bill may also include a standing charge. This is a fixed daily fee charged by your energy supplier to cover the cost of supplying energy to your home, regardless of how much energy you use.
Some energy suppliers may not charge a standing charge but will instead include the fixed cost of supplying energy into their unit rate.
In addition to the above, your energy bill may include other charges and fees, such as VAT, government levies, and any outstanding debt you owe to your energy supplier.
Your energy bill will also include information on how to pay, how often you need to pay, and any discounts or savings you may be eligible for.
How does wholesale gas price affect my energy bills?
Wholesale costs can have a significant impact on your energy bills. Wholesale costs are the prices energy suppliers pay to buy gas and electricity from the wholesale market, which they then pass on to their customers.
When wholesale costs are high, energy suppliers may increase their prices to maintain their profit margins, which can result in higher energy bills for consumers. Similarly, when wholesale costs are low, energy suppliers may reduce their prices, which can lead to lower energy bills for consumers.
Wholesale costs can be affected by a range of factors, such as changes in demand for energy, changes in supply, global events that affect the cost of energy, and fluctuations in the exchange rate. For example, the geopolitical situation around Ukraine is one big factor currently being blamed for the price of wholesale energy.
It’s important to note that wholesale costs are just one element of your energy bill, and energy suppliers may also factor in other costs, such as transportation, distribution, and operational costs, when setting their prices. However, changes in wholesale costs can have a significant impact on the overall price you pay for your energy. In fact, for a customer with typical energy consumption who pays via direct debit, the wholesale cost of gas and electricity constitutes approximately 70% of the default tariff price cap for a dual-fuel energy plan.
How can I drastically reduce my energy bills?
Reducing your home energy costs can help you save money on your bills, as well as reduce your carbon footprint and contribute to a more sustainable future. Here are some tips on how to reduce your home energy costs:
- Improve your home’s energy efficiency
Improving the energy efficiency of your home is one of the most effective ways to reduce energy consumption and lower your bills. Here are some ways you can do that:
- Insulate your home – Insulating your loft, walls, and floors can help to reduce heat loss and keep your home warmer in winter, meaning you’ll use less energy on heating.
- Invest in double glazed windows – Installing energy-efficient windows can help to reduce heat loss and keep your home warmer in winter.
- Replace old appliances – replacing old ones with newer, more energy-efficient models can help reduce energy consumption and save you money on your bills. Look for appliances with an A+ or A++ energy rating, which are the most energy-efficient.
- Upgrade your boiler – If you currently have an older boiler, then upgrading to a new A-rated energy-efficient boiler can save you up to £840 per year on your utility bills, according to the EnergySavingTrust. It’s also better for the environment and will save on the repair costs of keeping an older boiler going.
- Install LED lights – LED lights use up to 90% less energy than traditional incandescent bulbs, meaning you’ll use less energy on lighting and save money on your bills.
- Change your energy usage habits
Making small changes to your energy usage habits can also help to reduce your bills. Here are some energy-saving practices you can adopt:
- Turn off lights and appliances when not in use.
- Unplug electronics when not in use – Even when turned off, electronics continue to draw power if they are plugged in. This is called “phantom energy” or “vampire energy.” To avoid wasting energy, unplug electronics when they are not in use or use power strips with on/off switches to easily turn off multiple devices at once.
- Use a clothesline – Using a clothesline instead of a tumble dryer can help to reduce energy consumption and save you money on your bills.
- Turn down the thermostat – Turning down the thermostat by just one degree can help to reduce energy consumption and save you around £120 a year on your bills.
- Invest in a smart thermostat – A smart thermostat allows you to set the temperature in your home based on your schedule. By automatically adjusting the temperature when you are not home or when you are sleeping, you can save money on your energy bills.
- Use natural light – When possible, use natural light instead of artificial lighting. Open curtains and blinds during the day to let sunlight in, and consider installing skylights to bring in more natural light.
- Use energy-efficient showerheads – Energy-efficient showerheads can help reduce water and energy consumption.
- Seal air leaks – Air leaks around windows, doors, and other areas can cause drafts and increase your energy bills. Use weatherstripping and caulk to seal air leaks and keep your home more energy-efficient.
- Reduce water usage – Reducing water usage can also help you save energy. Take shorter showers, fix leaks promptly, and install low-flow showerheads and faucets.
- Use a smart power strip – A smart power strip can detect when devices are not in use and automatically turn them off to save energy. This can be especially useful for devices that are difficult to unplug or turn off manually, such as game consoles and computer equipment.
Need help paying your energy bills?
If you’re struggling to pay your energy bills, there’s help available for you:
- Cost-of-living payment – This is a one-off payment which will be automatically paid to low-income households.
- Winter Fuel Payment – If you were born on or before 26 September 1955, you might be eligible for the Winter Fuel Payment, an annual payment made to help with heating costs during the winter months.
- Cold Weather Payment – If you’re getting certain benefits or Support for Mortgage Interest. (Click on the link to find out more), you may be eligible for the Cold Weather Payment, which is a payment made when temperatures fall below a certain level in your area, over a set number of days.
- Warm Home Discount – If you receive certain benefits or have a low income, you may be eligible for the Warm Home Discount, a one-time payment to help with your energy bills during the winter months.
- Payment plans and assistance programs: Many energy companies offer payment plans and assistance programs for customers struggling to pay their bills. Contact your energy company to see what options may be available to you.
Charities which can help you with the rising energy bills
- DEPHER (Disability and Elderly Plumbing and Heating Emergency Repair) is an organisation that offers vulnerable individuals access to affordable and essential emergency plumbing and heating repairs. The organisation depends on public donations to cover the costs of both labour and materials. During the winter months, DEPHER provides free services; during the summer, discounted services are available to those in need.
- End Fuel Poverty – they aim to influence the Government and other bodies to take action to end fuel poverty and thereby improve people’s health and quality of life as well as seeking to reduce the cost of living, create jobs and negate carbon emissions in the process.
- National Energy Action (NEA) – the national fuel poverty charity, working to ensure that everyone in England, Wales and Northern Ireland is warm and safe at home. It began almost 40 years ago when students at Durham University established a group of volunteers to install loft insulation in the homes of elderly local people. Nowadays, National Energy Action (NEA), employs over 70 staff across England, Wales and Northern Ireland. They also work closely with their sister charity Energy Action Scotland.
