UK households spent an average of £1,738 on dual-fuel energy in 2024/25, with the Ofgem price cap moving four times a year and standing charges climbing year-on-year regardless of how much you actually use. This guide explains what the price cap covers, why standing charges have risen so much, when fixed deals beat the cap and the changes that genuinely move the dial on annual cost.
The energy price cap, set by Ofgem, limits the maximum unit rate (per kWh) and maximum standing charge (per day) that a supplier can charge a customer on a default Standard Variable Tariff. It's reviewed quarterly — January, April, July and October.
The widely-quoted '£1,700-ish typical bill' figure assumes 2,700 kWh of electricity and 11,500 kWh of gas per year. A 1-bed flat uses far less; a 4-bed detached far more. Always check your own usage in kWh on a recent bill rather than the headline number.
Standing charges (currently around 60p/day electricity + 30p/day gas) cover network maintenance costs, supplier-of-last-resort levies (when failed suppliers are absorbed), smart meter rollout costs and government social/environmental obligations.
The shift from per-kWh recovery to per-day recovery has been criticised because it disadvantages low users — a frugal pensioner pays the same standing charge as a 5-bed family. Ofgem's 2024 consultation proposed letting customers choose a low-standing-charge / higher-unit-rate tariff. Watch for these in 2026.
A fixed tariff locks both your unit rates and standing charges for a set term (12-24 months typically). It's worth fixing when (a) wholesale prices look likely to rise during your term, and (b) the fixed rate is no more than 5-8% above the current cap.
If a fix is more than 10% above the current cap, the cap usually wins on average over 12 months. Use uSwitch, MoneySavingExpert's Cheap Energy Club or Citizens Advice's tool to compare like-for-like.
Heating thermostat 1°C lower: roughly 8-10% off gas use, around £100/year for an average home. Showering instead of bathing: £50-£80/year. Running washing machines at 30°C not 60°C: £30/year.
Bigger wins: loft insulation top-up to 270mm (£300-£500 install, often grant-funded; saves £200/year), cavity wall insulation (where suitable, £400-£500, saves £250/year), modern A-rated boiler instead of pre-2005 G-rated (saves £300+/year and unlocks heat-pump readiness).
Smart meters don't reduce your bill on their own, but unlock time-of-use tariffs like Octopus Agile, Cosy, Intelligent Go and OVO Charge Anytime. Off-peak rates of 7-15p/kWh (vs price-cap of ~25p/kWh) can transform the economics of EV charging, electric heating and battery storage.
If you have an EV, a heat pump or solar+battery, time-of-use tariffs typically save £300-£800/year vs a flat rate. Without those, savings are smaller but moving dishwasher and washing machine to overnight slots still helps.
It caps the unit rate and standing charge, not the total bill. If you use more, you pay more. The 'typical' figure is a benchmark, not a maximum.
A modern A++ rated air-con / heat pump unit (£0.05-0.10 per hour at off-peak rates) beats portable electric heaters (£0.50/hour at peak rates) by 5-10x.
No — but suppliers are required to offer them, and some of the cheapest tariffs are smart-meter only. Refusal is your right.
The current government scheme funding insulation, boilers and heat pumps for low-income and vulnerable households. Ends March 2026 — check eligibility now if you might qualify.