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Why is my energy bill so high?

Most of us used to know roughly what to expect from our energy bill. But the energy crisis has changed all that. Understand why it’s happening, as well as other factors that might be causing your gas and electricity bills to rise.

Most of us used to know roughly what to expect from our energy bill. But the energy crisis has changed all that. Understand why it’s happening, as well as other factors that might be causing your gas and electricity bills to rise.

Written by
Sajni Shah
Utilities comparison expert
Last Updated
8 DECEMBER 2023
9 min read
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The energy crisis and its impact on bills

The soaring cost of wholesale gas prices led to big increases in energy costs for suppliers, which they have passed on to customers. And because gas is used for electricity generation, this pushes up electricity bills as well as gas bills.

To help protect customers, energy watchdog Ofgem put in place an energy price cap that sets a top limit on what suppliers can charge customers per unit of gas or electricity. When it became clear that this might not be enough to help some households, the government stepped in and introduced the Energy Price Guarantee from 1 October 2022. Again this sets a maximum limit on the amount suppliers can charge per unit of gas or electricity.

The Energy Price Guarantee will remain in place until the end of March 2024 as a safety net should energy prices increase over £3,000.

However, the guarantee's not an overall limit on what you'll pay. That will also depend on:

  • How much gas and electricity you use
  • Where you live - as standing charges and prices vary from region to region
  • What kind of meter you have
  • How you pay for your energy.

Why are gas and electricity prices rising?

Prices are going up because of wider geopolitical issues. These include conflict, climate change and greater demand following on from COVID-19 lockdowns. All are having an impact on fuel prices, making them more volatile and more expensive.

The UK also has a much lower level of gas storage capacity than continental Europe, meaning more gas has to be bought in at current high prices.

What help is available for high energy bills?

To help struggling households deal with rising energy bills and the cost of living, the government has already put in place a package of measures in addition to the Energy Price Guarantee.

See more details on the government’s cost of living support package.

Check if you are entitled to any financial support or benefits

There are also other sources of help – see our guides to what to do if you can't afford to pay your bills and energy grants and schemes.

Other reasons for high energy bills

In the rest of this guide, we’ll look at other reasons your energy bill might be so high, and what you can do to cut down your costs.

What’s the average energy usage in the UK?

It’s handy to know how much energy the average household uses. That way you can get a rough idea of whether you’re within the limits of what’s ‘normal’, or whether you need to start thinking of ways to save energy.

You should be able to find out what your monthly consumption is from your last bill. Energy use is measured in kilowatt hours (kWh), so that’s what you need to look out for. Your supplier may also send you an annual statement of use.

Typical usage based on type of home

The energy price cap is calculated using the values shown here.

Energy Use Example – home type and number of residents Typical annual gas use (kWh) Typical annual electricity use (kWh)
Low Flat or 1-bedroom house; 1-2 people 7,500 1,800
Medium 2-3 bedroom house; 2-3 people 11,500 2,700
High 4+ bedroom home; 4-5 people 17,000 4,100

 

What can cause a high energy bill?

High energy bills can be caused by the price of energy rising, the way energy is being used, or a mix of both. You might be able to cut down your energy use but when wholesale prices rise steeply, there is little individual consumers can do.

As well as rising energy prices, your bills could be affected by:

  • Variable tariffs - with variable tariffs, the amount of money you pay per unit of energy consumed can. This isn’t the case with a fixed tariff.
  • Estimated vs accurate billing - estimated billing is when your supplier estimates your energy consumption and charges you based on that best guess. If you haven’t been giving your energy supplier monthly meter readings, you may fall victim to inaccurate billing. Switching to a smart meter could help prevent this. If you think an estimated bill is wrong, you should be able to give your supplier an updated reading and get your bill amended.
  • Recently moved home – when you move home, you may find yourself with a different supplier or tariff that’s more expensive than your previous one. Or you may find that your new property is not as well insulated, is larger and requires more heating or that the boiler or shower is less efficient than you’re used to. You’ll need to do some detective work and find out what’s making the difference. It could be several things that add up over the months. See more on energy and moving home.
  • Faulty appliances – that ancient washing machine or a fridge that’s on the blink could end up costing you more money to run. Faulty appliances – even dodgy old wiring – can sap electricity. So if in doubt, it might be worth having a professional check it out.
  • New appliances – while newer appliances tend to be more efficient than old ones, if you've suddenly acquired a tumble drier, hot tub or plug-in heater where you didn't have one before, you might find that your bills have gone up more than expected.
  • Your meter isn’t working properly – it doesn’t happen often, but a faulty meter could be inaccurately recording your usage. If you think this is the case, contact your energy provider and they’ll send someone out to take a look.
  • Your consumption has changed - maybe you’re just using more energy. If it’s a particularly hot summer or cold winter, air conditioning or central heating may have bumped up your bills. Or you may be spending more time at home – for example if you’re working from home.

See more on understanding your energy bill.

How can I make sure I’m on the right tariff for my needs?

First, find out what energy tariff you’re on. It should be easy to spot on a recent bill or statement. It’s usually somewhere near your customer reference number, or within the ‘your account’ section.

You’ll need to think about what you want from your energy supplier.

Standard tariffs give you maximum flexibility as you can leave at any time without incurring exit charges.

Fixed rate tariffs fix the amount of money you pay per kWh. So while your bills will vary according to how much you use, the basic unit price of energy won’t change. If your usage is consistent, your bills should be too. The drawback is that you won’t benefit from any reductions in wholesale energy prices for the fixed period you’ve agreed to.

If your fixed rate tariff has come to an end and you haven’t switched to a new deal, you’ll be rolled over to your supplier’s standard variable tariff. This is typically more expensive than a fixed rate tariff. In normal circumstances, it would be a good time to switch to a better deal – but in the current climate, it might be difficult to find a cheaper tariff than the standard variable tariff with the new Energy Price Guarantee in place.

Time of use tariffs such as Economy 7 or Economy 10 tariffs, give you a certain number of hours of ‘off-peak’ energy (usually at night or early morning). Some also offer special rates for charging an electric vehicle. If you’re not around during the day and end up doing all your household jobs at night, this could work for you.

If you have a smart meter, some energy providers are trialling a scheme to reward customers for not using electricity at peak times – potentially up to £100. So you could see if you can take part.

You can compare energy tariffs with Compare the Market. Simply fill in your details and see if you could move to a better deal today.

What can I do if my energy bill is not correct?

If your energy bill is higher than usual and you think you’ve been overcharged, contact your supplier and query it. If it’s a mistake on their part, you should be able to claim a refund.

Or it could be that you haven’t submitted regular meter readings, so your supplier has estimated your usage based on previous bills. You can usually submit your own meter reading within a set number of days of getting your estimated bill and it will be recalculated. The best way to avoid this kind of inaccurate bill in the future is to submit regular meter readings, or consider a smart meter, which will do it for you automatically.

A faulty meter could also be responsible for higher-than-normal energy bills. If you turn off your power for a few hours and the numbers keep rising, it’s likely there’s a fault. You should report it to your energy supplier and they’ll send an engineer to take a professional reading.

What if I can’t afford my energy bills?

If you’re struggling to pay your energy bills, talk to your supplier. Under Ofgem rules, energy providers must offer support to customers with financial difficulties by agreeing to an affordable payment plan that works for both of you. If you’re worried about talking to someone or are not sure what to say, see the MoneyHelper guide on how to talk to a creditor.

Also see our guides to what to do if you can't afford to pay your bills and energy grants and schemes.

How can I make my home more energy efficient?

Making your home more energy efficient will cut the cost of your energy bills, as well as reducing your carbon footprint. Simple changes, like switching to LED bulbs and avoiding leaving appliances on standby can add up to significant savings.

Read our guide for useful tips on how to save energy at home.

What else can I do to save money on my energy bills?

In normal times, switching to a cheaper tariff can help reduce your bills. This isn't possible at the moment – but once deals are available again, we'll be able to help you compare.

Some companies may offer a dual fuel discount if you get both your gas and electricity from them too, so it’s worth seeing if that could help.

A smart meter can help you manage your usage and make sure you pay for the electricity you’re actually using rather than an estimate.

Frequently asked questions

What is back-billing?

Back-billing is an accumulated bill for energy you’ve used but haven’t paid for. If you haven’t received your energy bill in a while, your supplier will eventually send you a ‘catch-up’ bill.

This can come as a nasty surprise, as the energy you’ve used could result in a hefty amount. But you can’t be charged for gas or electricity used more than 12 months ago if you haven't been correctly billed for it or previously informed about it via a statement of account.

You can avoid back-billing by submitting regular meter readings and making sure the information on your energy bills is correct. If you’re moving home, take readings on moving day and contact your new supplier as soon as possible.

See more on the back billing rules on the Ofgem website

What affects average use of gas and electricity?

Your usage depends on:

  • The size of your home
  • How many people live in your home
  • The energy efficiency and insulation of your home
  • The energy efficiency of your appliances and how often you use them
  • Your health.

How much will energy prices rise by?

It’s hard to say, there are a lot of variables that could affect the figure, including:

  • How cold winter is
  • How much wind or sunshine there is to generate renewable electricity
  • How quickly repairs and maintenance to power stations are carried out
  • How efficiently major energy suppliers have purchased their wholesale supplies
  • How global demand holds up.

What can I do if my energy supplier raises prices?

You can switch to another supplier, if you can find a cheaper tariff. We can help you compare energy prices based on your energy use, but due to energy price rises, we have only a limited number of tariffs that we can help you switch to right now.

Can a smart meter help me reduce my energy bills?

Installing a smart meter doesn’t automatically mean you’ll get cheaper energy bills – although some providers may offer cheaper smart meter tariffs to reflect admin savings.

However, a smart meter allows you to easily monitor your energy use. You can then use this information to reduce how much energy you’re using, which in turn could mean cheaper bills.

A smart meter also sends readings to your energy supplier, so your bills will be accurate. You’ll only be charged for the energy you use, not estimates.

Other smart tech can also help you manage your energy, for example by allowing you to switch on your heating remotely as and when you need it.

New energy deals are available now. See if you could switch to a better deal. Compare energy