Understanding your energy bill and the price cap
Most UK households are on a tariff governed by Ofgem's price cap, which limits the unit rate and standing charge suppliers can charge. Your bill is simply the energy you use multiplied by the unit rate, plus a daily standing charge for each fuel. Here's how it works.
Unit rate + standing charge
Every energy bill has two parts for each fuel:
- Unit rate, the price per kWh of energy you actually use.
- Standing charge, a fixed daily fee just for being connected, regardless of usage.
For 1 April, 30 June 2025, the GB-average capped rates are about 27.03p/kWh for electricity and 6.99p/kWh for gas, plus daily standing charges of roughly 53.8p and 32.67p.
What the price cap really limits
The Ofgem cap is widely misunderstood. It does not cap your total bill, it caps the unit rate and standing charge. If you use more energy, you pay more. The "typical bill" figure Ofgem quotes is just the cap applied to an average household's usage (2,700 kWh electricity, 11,500 kWh gas).
The cap changes every quarter
The cost you pay even using nothing
Standing charges have risen sharply and are now a meaningful chunk of bills, over £300 a year for a dual-fuel home before you use any energy. They cover network maintenance and policy costs. They're the same whether you're away all month or running everything, which frustrates low users.
A typical household
An average home using 2,700 kWh of electricity and 11,500 kWh of gas pays roughly £1,849 a year at current capped rates, split between the two fuels, with standing charges adding a fixed amount on top of usage.
Where the savings are
- Heating dominates gas use, turning the thermostat down 1°C can save around 10% of heating cost.
- Draught-proofing, loft and cavity-wall insulation cut waste cheaply.
- Check whether a fixed deal below the cap is available before switching.
- Submit regular meter readings so you're billed on actual, not estimated, usage.
Common energy bill mistakes
- Thinking the cap limits your total bill. It caps unit rates and standing charges, not the amount you owe.
- Ignoring standing charges. You pay over £300 a year before using any energy on a dual-fuel home.
- Relying on estimated readings. Estimates can over- or under-bill; regular meter readings keep you accurate.
- Assuming fixed deals always beat the cap. Compare the fixed unit rate against the current cap before committing.