Understanding UK Electricity Costs
With energy prices remaining a significant concern for UK households, understanding exactly how your electricity bill is calculated helps you take control of your costs. This guide breaks down everything from unit rates to appliance running costs, helping you budget effectively and identify savings.
Your electricity bill has two main components: the unit rate (cost per kWh of electricity used) and the standing charge (a daily fixed fee).
Current UK Electricity Prices (2025)
The Energy Price Cap sets maximum rates that suppliers can charge. From January 2025:
| Component | Price Cap Rate | Annual Cost (Typical Use) |
|---|---|---|
| Unit Rate (electricity) | ~24.50p per kWh | ~£660 (2,700 kWh) |
| Standing Charge (electricity) | ~60p per day | ~£219 per year |
| Unit Rate (gas) | ~6p per kWh | ~£660 (11,500 kWh) |
| Standing Charge (gas) | ~32p per day | ~£117 per year |
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How to Calculate Electricity Costs
Cost = (Watts × Hours) ÷ 1000 × Price per kWh
Monthly Bill = (kWh Used × Unit Rate) + (Standing Charge × Days)
Example: Running a 2kW Electric Heater
Power: 2,000 watts (2 kW)
Usage: 4 hours per day
Unit rate: 24.5p per kWh
Daily cost: 2 × 4 × 0.245 = £1.96 per day
Monthly cost: £1.96 × 30 = £58.80
Common Appliance Running Costs
| Appliance | Typical Wattage | Cost per Hour | Daily Cost (Est.) |
|---|---|---|---|
| Electric shower | 8,500W | £2.08 | £0.42 (12 mins) |
| Electric oven | 2,500W | £0.61 | £0.61 (1 hour) |
| Tumble dryer | 2,500W | £0.61 | £1.23 (2 hours) |
| Electric heater | 2,000W | £0.49 | £1.96 (4 hours) |
| Kettle | 3,000W | £0.74 | £0.12 (5 boils) |
| Washing machine | 500W avg | £0.12 | £0.18 (1.5 hour cycle) |
| Dishwasher | 1,800W | £0.44 | £0.44 (1 hour) |
| Fridge-freezer | 150W avg | £0.04 | £0.88 (24 hours) |
| LED TV (50") | 100W | £0.02 | £0.12 (5 hours) |
| Laptop | 50W | £0.01 | £0.10 (8 hours) |
| WiFi router | 10W | £0.002 | £0.06 (24 hours) |
| Phone charger | 5W | £0.001 | £0.01 (2 hours) |
Based on 24.5p per kWh. Actual wattages vary by model.
Average UK Electricity Usage
| Household Size | Annual kWh | Annual Cost (approx) |
|---|---|---|
| 1-2 bedroom flat | 1,800 | £660 |
| 2-3 bedroom house | 2,700 | £880 |
| 3-4 bedroom house | 4,100 | £1,225 |
| 5+ bedroom house | 5,500+ | £1,570+ |
Usage by Number of Occupants
| Occupants | Low Usage | Medium Usage | High Usage |
|---|---|---|---|
| 1 person | 1,400 kWh | 2,000 kWh | 2,800 kWh |
| 2 people | 2,000 kWh | 2,700 kWh | 3,800 kWh |
| 3 people | 2,500 kWh | 3,200 kWh | 4,500 kWh |
| 4+ people | 3,000 kWh | 4,100 kWh | 5,500 kWh |
Understanding Your Bill
Key Terms Explained
- kWh (kilowatt-hour): Unit of energy. Using 1,000 watts for 1 hour = 1 kWh
- Unit rate: Cost per kWh of electricity used
- Standing charge: Daily fixed charge regardless of usage
- Meter readings: Numbers from your electricity meter showing total kWh used
- Estimated vs actual: Bills based on estimated readings may differ from actual usage
Sample Bill Calculation
Period: 30 days
Electricity used: 250 kWh
Unit rate: 24.5p
Standing charge: 60p/day
Calculation:
- Usage: 250 × £0.245 = £61.25
- Standing: 30 × £0.60 = £18.00
- Subtotal: £79.25
- VAT (5%): £3.96
- Total: £83.21
Types of Electricity Tariffs
Standard Variable Tariff (SVT)
The default tariff if you don't actively choose one. Rates can change with market prices. Subject to the Energy Price Cap.
Fixed Rate Tariff
Locks in your unit rate and standing charge for a set period (usually 12-24 months). Provides bill predictability but may have exit fees.
Economy 7 / Economy 10
Two-rate tariffs with cheaper electricity during off-peak hours (usually overnight). Good for storage heaters or if you can shift usage to night-time.
| Economy 7 | Typical Rates |
|---|---|
| Peak rate (daytime) | ~28-30p per kWh |
| Off-peak rate (night) | ~10-12p per kWh |
| Off-peak hours | Usually 7 hours overnight |
Smart Tariffs
Require a smart meter. May offer time-of-use pricing, cheaper rates at certain times, or rewards for reducing usage during peak demand.
Tips to Reduce Your Electricity Bill
High-Impact Savings
- Switch off standby: Saves £65+ per year
- Use LED bulbs: Uses 90% less electricity than incandescent
- Lower washing temperature: 30°C vs 40°C saves ~40% per wash
- Air dry clothes: Tumble dryers are among the most expensive appliances
- Only boil water you need: Overfilling kettle wastes electricity
Heating & Hot Water
- Reduce thermostat by 1°C: Saves up to 10% on heating
- Use timer wisely: Heat only when needed
- Draught-proof: Prevents heat escaping
- Shorter showers: Electric showers are expensive
- Insulate hot water tank: If you have one
Smart Usage
- Run dishwasher/washing machine full: Same energy, more items
- Use eco modes: Modern appliances have energy-saving settings
- Time of use: If on Economy 7, shift usage to off-peak
- Unplug chargers: When not in use
- Smart plugs: Automate switching off devices
Energy Efficiency Ratings
When buying new appliances, check the energy efficiency rating (A to G, with A being most efficient):
| Appliance | A-rated Annual Cost | D-rated Annual Cost | Saving |
|---|---|---|---|
| Fridge-freezer | ~£40 | ~£80 | £40/year |
| Washing machine | ~£25 | ~£50 | £25/year |
| Dishwasher | ~£45 | ~£85 | £40/year |
| TV (55") | ~£15 | ~£35 | £20/year |
Worked Examples
Example 1: Calculate Monthly Electricity Bill
Monthly usage: 300 kWh
Unit rate: 24.5p/kWh
Standing charge: 60p/day × 30 days = £18
Usage cost: 300 × £0.245 = £73.50
Subtotal: £73.50 + £18 = £91.50
VAT (5%): £4.58
Total bill: £96.08
Example 2: Cost to Run Electric Car Charger
EV battery: 60 kWh
Charging from 20% to 80%: 60% = 36 kWh
At standard rate (24.5p): 36 × £0.245 = £8.82
At off-peak rate (10p): 36 × £0.10 = £3.60
Saving charging overnight: £5.22 per charge
Example 3: LED vs Incandescent Lighting
Incandescent bulb: 60W × 5 hours/day × 365 days = 109.5 kWh/year = £26.83
LED equivalent: 8W × 5 hours/day × 365 days = 14.6 kWh/year = £3.58
Annual saving per bulb: £23.25
10 bulbs: £232.50 annual saving
Frequently Asked Questions
How much does electricity cost per kWh in the UK?
Under the Energy Price Cap (from January 2025), the typical unit rate is around 24.50p per kWh for electricity. Rates vary by supplier, region, and tariff type. The standing charge is approximately 60p per day.
How do I calculate my electricity usage?
Multiply the appliance's wattage by hours of use, then divide by 1,000 to get kWh. For example, a 100W TV used for 5 hours: (100 × 5) ÷ 1,000 = 0.5 kWh. Multiply by your unit rate for the cost.
What is the average UK electricity bill?
The average UK household uses about 2,700 kWh of electricity per year. At current rates, this costs approximately £900-1,000 annually, including standing charges. Actual costs depend on household size and usage patterns.
What is the standing charge?
The standing charge is a daily fixed fee you pay regardless of energy usage. It covers costs like meter maintenance and network upkeep. For electricity, it's typically around 50-60p per day (£180-220 per year).
Why is my electricity bill so high?
Common causes include electric heating, old inefficient appliances, tumble dryer use, electric showers, always-on devices, and estimated meter readings. Consider a smart meter to track usage in real-time.
Calculate your electricity costs
Try Our Free Energy Calculator →UK Energy Market: Understanding Your Rights and Saving Money
The UK energy market is regulated by Ofgem (the Office of Gas and Electricity Markets), which sets the rules that energy suppliers must follow and protects the interests of consumers across Great Britain. One of Ofgem's most important functions is setting the energy price cap, which limits the maximum amount that suppliers can charge per unit of gas and electricity for customers on default or standard variable tariffs. The price cap is reviewed quarterly and applies to approximately 29 million households across England, Scotland, and Wales. Northern Ireland has a separate regulatory framework overseen by the Utility Regulator.
UK households looking to reduce their electricity bills have several practical options. The Energy Company Obligation (ECO) scheme requires large energy suppliers to fund energy efficiency improvements for qualifying households, including loft insulation, cavity wall insulation, and boiler replacements. The Warm Home Discount scheme provides an annual 150-pound rebate on electricity bills for eligible low-income and vulnerable customers. Additionally, the Winter Fuel Payment (between 100 and 300 pounds depending on circumstances) is available to most pensioners born before a qualifying date, and Cold Weather Payments of 25 pounds are triggered automatically when temperatures drop below zero degrees Celsius for seven consecutive days in your area.
Smart meters have been rolled out across the UK as part of a government-backed programme, with the aim of installing them in every home and small business. Smart meters send automatic meter readings to your energy supplier, eliminating estimated bills and allowing you to track your energy usage in real time through an in-home display. As of 2025, over 34 million smart meters have been installed across Great Britain. The programme has faced some challenges, including early SMETS1 meters that stopped communicating when customers switched suppliers, though the newer SMETS2 meters are interoperable across all suppliers.
Frequently Asked Questions About UK Electricity Bills
What is the Ofgem energy price cap and how does it affect my bill?
Can I switch energy suppliers in the UK to save money?
What government help is available for UK households struggling with energy bills?
James Mitchell, ACCA
Chartered Accountant & Former HMRC Advisor
James is a Chartered Certified Accountant (ACCA) specialising in UK personal taxation and financial planning. With over 12 years in practice and a background as a former HMRC compliance officer, he brings authoritative insight to complex tax topics.