Understanding UK electricity prices is essential for managing your energy costs. This guide explains current rates, how the Ofgem price cap works, the different tariff types available, and how to find the cheapest electricity rate for your household.
Current UK Electricity Rates (2024/2025)
As of Q1 2025, under the Ofgem energy price cap:
| Charge | Rate | What It Covers |
|---|---|---|
| Electricity unit rate | ~24.5p per kWh | Price for each unit of electricity used |
| Electricity standing charge | ~61p per day | Daily connection fee (paid regardless of usage) |
| Gas unit rate | ~6.2p per kWh | Price for each unit of gas used |
| Gas standing charge | ~32p per day | Daily gas connection fee |
| VAT | 5% | Applied to total bill |
Typical annual bill: Under the current price cap, a household with typical consumption (2,700 kWh electricity + 11,500 kWh gas) pays approximately £1,717 per year. Your actual bill depends on your specific consumption — use our calculator to estimate individual appliance costs.
How the Ofgem Price Cap Works
The Ofgem energy price cap is widely misunderstood. Here's what it actually does:
What the price cap IS:
- A maximum limit on the unit rate (per kWh) and standing charge that suppliers can charge
- Updated quarterly (January, April, July, October) based on wholesale energy costs
- Applied to customers on default/standard variable tariffs and prepayment meters
What the price cap IS NOT:
- It is not a cap on your total bill — if you use more energy, you pay more
- It does not apply to fixed tariffs — fixed deals can be above or below the cap
- The "typical household" figure (£1,717) is not a maximum bill — it's an illustration based on average consumption
Price Cap History
| Period | Electricity Rate (p/kWh) | Typical Annual Bill |
|---|---|---|
| Pre-crisis (2021) | ~18p | ~£1,138 |
| Oct 2022 (with govt guarantee) | ~34p | ~£2,500 |
| Jan 2023 | ~33p | ~£2,500 |
| Apr 2023 | ~30p | ~£2,074 |
| Jul 2023 | ~30p | ~£2,074 |
| Oct 2023 | ~27p | ~£1,834 |
| Jan 2024 | ~28p | ~£1,928 |
| Apr 2024 | ~24.5p | ~£1,690 |
| Jul 2024 | ~22.4p | ~£1,568 |
| Oct 2024 | ~24.5p | ~£1,717 |
| Jan 2025 | ~24.5p | ~£1,738 |
While rates have fallen significantly from the 2022/2023 peak, they remain approximately 35% higher than pre-crisis levels (2021). Experts do not expect a return to pre-crisis prices in the near term.
Tariff Types Explained
Standard Variable Tariff (SVT)
This is the default tariff you're on if you haven't actively chosen a deal. It follows the Ofgem price cap — rates change quarterly. It's typically the most expensive option and you should almost always switch away from it.
Fixed Rate Tariff
Your unit rate and standing charge are locked for a set period (usually 12–24 months). Benefits:
- Price certainty — you know exactly what you'll pay per unit
- Protection if prices rise
- Often cheaper than SVT (especially when fixed deals are competitive)
Downsides: you may face exit fees if you leave early, and if prices fall, you're locked in at the higher rate. Currently (January 2025), some fixed deals are available at or slightly below the price cap.
Time-of-Use Tariffs (Economy 7 / Intelligent Tariffs)
Different rates apply at different times of day:
| Tariff Type | Off-Peak Rate | Peak Rate | Off-Peak Hours |
|---|---|---|---|
| Economy 7 | ~10–15p/kWh | ~30–38p/kWh | Midnight – 7am (varies) |
| Intelligent Octopus Go | ~7.5p/kWh | ~24.5p/kWh | 23:30 – 05:30 |
| Agile Octopus | Variable (can be negative) | Variable (up to 100p) | Varies by half-hour |
Time-of-use tariffs are excellent if you can shift significant usage to off-peak (EV charging, storage heaters, dishwasher/washing machine overnight). They're poor value if most of your usage is during peak hours.
Prepayment Tariffs
Pay for energy in advance via a meter key, card, or smart meter app. Historically more expensive than credit tariffs, but since January 2024, Ofgem has ensured prepayment customers pay no more than credit customers under the price cap. Smart prepay meters can top up via phone/online.
What Makes Up the Electricity Price?
When you pay 24.5p per kWh, here's approximately where your money goes:
- Wholesale energy costs: ~40% (buying electricity on markets)
- Network costs: ~25% (maintaining the grid infrastructure)
- Environmental/social obligations: ~15% (renewable subsidies, Warm Home Discount, ECO scheme)
- Supplier operating costs & margin: ~12% (billing, customer service, profit)
- VAT: 5%
- Other: ~3% (smart meter rollout, balancing costs)
How to Find the Cheapest Electricity Rate
- Check if you're on SVT: If your fixed deal has ended and you haven't switched, you're likely on the most expensive tariff available.
- Compare tariffs: Use Ofgem-accredited comparison sites to check current deals. Look at the unit rate AND standing charge — both matter.
- Consider your usage pattern: High evening/weekend users benefit from standard tariffs. Those who can shift to off-peak (EV owners, storage heater users) benefit from time-of-use tariffs.
- Check exit fees: If you're on a fixed tariff, check whether exit fees apply before switching. Sometimes paying the fee still saves money overall.
- Review annually: Set a diary reminder to check your tariff before it ends. Suppliers typically give 49 days notice before rolling you onto SVT.
Regional Price Differences
Electricity prices vary slightly by region due to different network distribution costs. The cheapest regions tend to be in the south and midlands, while Scotland and parts of northern England/Wales can be slightly more expensive. However, differences are typically small (1–3p/kWh) under the price cap.
Using Our Calculator with Your Rate
For the most accurate cost estimates from our energy cost calculator, enter your exact unit rate from your latest energy bill rather than using the default. Your rate may differ from the national average if you're on a fixed deal, time-of-use tariff, or in a different region.
You can find your unit rate on your energy bill (usually shown in pence per kWh) or in your supplier's app/online account under "tariff details."