The reasons are numerous, but there are four key ones:
The first reason, quite simply, comes down to supply and demand. If there are relatively few people in your area, then the per-unit cost is driven up. On the flipside, if the energy company knows they'll be serving lots of customers, then they can bulk buy from generators to serve a densely populated area. This means the cost per unit in these areas tend to be a little lower (see point number two for more explanation).
To provide you with power, energy companies buy energy from generators. These purchases are made in advance, based on predictions about demand; so, if they need to supply more at short notice, for instance, it can drive overall costs up.
Local distribution networks help distribute most of the energy that powers homes and businesses in Britain. Energy suppliers pay these local distribution networks a fee for using their services.
In regions where it gets colder — for instance in North Scotland - customers on average use more of their electricity for heating purposes than they do in the rest of the country. The network distributing the energy factors this into their costs, and explains to some degree why North Scotland has some of the highest electricity distribution costs.
You energy bill may be divided between electricity and gas, but there are other costs that go into your bill, too. Wholesale gas and electricity is the majority of your bill, making up about 40% of the overall cost. The next-largest factor is network costs (the costs of distributing the energy), and the rest is operating costs (your supplier's overhead), VAT, and your supplier's markup. Finally, there are costs relating to green energy subsidies that energy companies are required to pay by the government.
Therefore, if you are seeing an increase in your energy bills, the largest single factor will be the wholesale cost of gas and electricity, followed by the cost of distributing it. However, energy companies in Britain are run as private corporations and can raise prices whenever they want.
One of the best ways to keep your energy costs down is to use less energy, and there are ways you can save without resorting to wearing a winter jacket to bed.
When it comes to reducing your energy use, make sure you do the simple things first. Ensure all your light bulbs are energy saving, check for draughts around windows and doors, and turn your thermostat down one degree. Discover more energy saving tips in our energy-saving guides.
Next, look into home insulation to save on energy usage — and energy costs. You should also make sure you take advantage of any government grants and programmes available to you. If you are receiving a pension, for example, you may be entitled to the Warm Home Discount.
A really simple way to reduce the cost of your energy bill is to make sure you are on the cheapest tariff. Be sure to compare energy prices regularly and see if your plan is the cheapest available. Energy suppliers have a range of tariffs offering dual-fuel discounts, discounts for paying by Direct Debit and discounts for managing your account online.
Similarly, different suppliers offer different rates, even in the same area. It doesn’t pay to be loyal when it comes your energy supply — competition is what ensures that energy suppliers don't charge customers too much for their bill.So don’t be afraid to vote with your feet when it comes to switching energy suppliers.
Electricity and gas bills in Britain vary between regions, even if you have the exact same circumstances and use the exact same amount of energy as another household. For instance, as far as prices in 2022 are concerned, the most expensive average electricity bill can be found in London, while those in the North East pay the least for electricity on average.
The additional costs per region reflect the different network costs associated in that part of the country. If you feel like energy bills in your region are particularly high, it's worth knowing that the UK as a whole has the 10th most expensive energy bills.
The typical household's electricity bills from around the country can differ from region to region.
As of summer 2022, London, the South East and North Wales & Mersey have the highest average electricity unit rates, with the three regions paying over 29p per kWh on average. The Northern region is the cheapest area for electricity at 26.86p per kWh. Find out how much you can save on electricity cost today by running an energy comparison.
When comparing gas bills for households buying energy from the largest six suppliers in the country, the gas unit rates differ very slightly from region to region. As of summer 2022, London and the South Western region have the highest average gas unit rates, with the two regions paying 7.49p per kWh on average.
While you can't easily compare energy to find out how much you can save on gas costs, Uswitch is working hard to bring suitable deals back to the market as quickly as possible.
Energy is generated in a number of ways. Discover where, what and how your home energy is created? Find out what your current energy supplier's fuel mix is.Learn more
Find out which suppliers have increased or decreased their energy prices and how that affects your energy bills in 2022.Learn more
Record meter readings from a standard dial meter, digital meter or an Economy 7 gas and electricity meters in this Uswitch guide to reading energy meters.Learn more