For the last two years, the UK has been stuck in a severe energy crisis. This cost of living squeeze is set to get worse again from 1 January 2024, when energy bills will rise 5% for most households. See our energy comparison guide to find out about what the latest development means for energy deals.
This bills hike has come about because rising wholesale prices have forced up the rate of the Ofgem energy price cap. With each new price cap announcement, the energy regulator calculates an annual cost figure by multiplying average unit rates for gas and electricity with its typical consumption figures for a typical household (more on this below).
While your unit rates and standing charges are pretty much baked in (with exact costs varying depending on where in the UK you live), your actual energy bills will be higher or lower than Ofgem’s headline figure depending on your usage. Our energy saving tips guide can help you reduce your gas and electricity costs.
So, what prices can a typical household expect to pay? Here are how average energy bills look depending on your payment method and meter type.
Direct debit via a standard credit meter
If you pay for your gas and electricity after you’ve used it, and you’re paying with a direct debit, Ofgem says you can currently expect an annual bill of around £1,834. From 1 January until 31 March 2024, it will rise 5% to £1,928 a year.
These figures are based on typical usage figures of 11,500 kilowatt hours (kWh) for gas and 2,700 kWh for electricity. The kind of household that could expect to use these sorts of numbers would be a two to three bedroom household containing two to three people. For different house sizes, see below.
Standard credit meter (not direct debit)
If you don’t pay with a direct debit (for example, because you pay quarterly), your average energy bill is likely to be slightly higher – even if you use the same amount of energy as a typical household.
Ofgem says you can expect to pay £1,959 under the current price cap. The extra £125 compared to the direct debit comes because the energy regulator allows suppliers to recover extra costs associated with non-direct debit payments and the likelihood that people paying this way may be in debt. The figure will rise £99 from 1 January 2024 to £2,058.
Paying as you go also increases costs for suppliers. Ofgem says the price cap for an average household with a prepayment meter will be set at around £1,861 a year. This will rise to £1,960 from 1 January.
However, given many of the people who prepay are on low incomes, struggle to keep up with their energy bills or are vulnerable in other ways, the government has temporarily got rid of what it calls the ‘prepayment premium’. Under the energy price guarantee, which runs until March 2024, it is part-subsidising pay as you go tariffs so they either cost the same or slightly less than what direct debit customers would pay.
Economy 7 meters
If you have an economy 7 meter, your typical energy use is likely to be very different to households that have other types of energy meter. Economy 7 was brought in for properties that have hot water tanks fitted instead of a gas boiler. These homes also tend to be single fuel, only using electricity for their heating and power.
Given these meters offer two different rates for energy – one for peak and the other for off-peak – Ofgem calculates the average annual bill for them based on two assumptions.
As with what you’ve already read in this piece, the first is a typical annual consumption value – 3,900kWh in the case of economy 7. The other assumption is that the average household with this sort of meter uses 58% of their energy at peak times and 42% during off-peak hours.
An average-sized household meeting these assumptions is currently paying £1,219 for its energy. The reason why it is so much lower than the others we’ve listed above is because economy 7 meter homes only use electricity. From 1 January 2024, the annual figure rises to £1,272.
What about other property types?
Ofgem calculates the average energy usage of households based on assumed property types and the number of occupants in the home. We’ve listed these typical consumption figures below:
|Energy use||Home type||Typical gas use (kWh per year)||Typical electricity use (kWh per year)||Typical electricity use for economy 7 (kWh per year)*|
|Low||Flat or one-bed house; one to two occupants||7,500||1,800||2,200|
|Medium||Two or three-bed house; two to three occupants||11,500||2,700||3,900|
|High||Four+ bedroom house; four to five occupants||17,000||4,100||6,700|
*Ofgem makes the same peak/off-peak usage assumptions as it does with the average medium-energy use property, ie. 58% energy use at peak times and 42% during off-peak hours.
If you want to see how much your energy bill will roughly come to, match yourself up to one of these property and usage types. You should then multiply the typical usage for each fuel with the unit rates that apply in your part of the country (you can find these regional rates on the Ofgem website). You should also multiply the standing charges for each fuel by 365, as that’s the number of days you’ll be charged for each year. Adding the figures you get together will give you a rough idea of how much you can expect to pay annually.
However, this is not a perfect science. Your bills will fluctuate every three months due to changes to the Ofgem cap. You may also use more or less energy depending on the quality of the insulation in your home, and the type of property you live in (eg. detached or semi-detached).
Here’s a recap of the costs the average medium-use household could expect for each different meter/payment type, both under the current price cap and the new one: