Energy Prices per kWh

There are all sorts of costs that make up your energy bill, but when comparing gas and electricity prices, there are two you need to focus on:

• Unit rate - Measured in kilowatt hours (kWh), this is the amount you pay for the gas and electricity you use. If you have a fixed tariff, the unit rate is fixed, but your bills will still vary depending upon how much energy you use.
• Standing charge - This is a fixed daily fee to cover the cost of supplying gas and electricity to your house.

Although the cost of your energy bills ultimately depends upon how much gas and electricity you use each month, if you're looking for the cheapest energy deal, then choose the one with the lowest unit rate and standing charge.

What is a kWh?

A kilowatt-hour (kWh) is the unit of energy that suppliers use to measure how much gas and electricity you're using, and works out at 1,000 watts (W) - or 1 kilowatt (kW) - of energy used for one hour (h).

The amount you pay per kWh will depend upon your supplier and the type of tariff you're on. It's important to know what unit rate, so you know how much you're paying for the energy you use, and can use this figure when to comparing gas prices and electricity prices.

Working out how much energy an appliance uses

Choosing a deal with a lower unit rate is one of the simplest ways to cut the cost of your energy bills, but it also helps to switch to energy efficient appliances, or at least use your existing appliances more efficiently. That's why it helps to know how much energy your appliances use.

The power of your electrical appliances, from light bulbs to washing machines is measured in watts. Once you know this figure, you can work out the running costs of any appliance by multiplying the wattage by the number of hours it's been used, then dividing this figure by 1,000.

A 50W light bulb, for example, would need to be switched on for 20 hours to use 1kWh of energy, while a 200W games console would need to be played for five hours to use 1kWh of energy.

Working out how much it costs to run an appliance

Once you know how much energy an appliance uses, you can then work out how much it costs to run by working out the electricity costs per kWh. To do this, just multiply the kWh used by the unit rate charged by your electricity supplier.

If you're energy supplier charges 14.40p per kWh (the current UK average), then it would cost you 14.40p to have that 50W light bulb switched on for 20 hours. If you went on a gaming binge, and played your 200W games console for ten hours, this would cost you 28.80p.

How your energy bill is calculated

Although the unit rate and the standing charge are the two things you should look out for when comparing energy tariffs, it's also worth knowing a bit about what costs go into making up those charges.

According to Ofgem, the energy regulator, every dual fuel energy bill - whereby you have the same supplier for gas and electricity - is made up by the following costs:

• Wholesale costs (37.59%) - This is to cover the price your energy provider pays for the gas and electricity it sends to your home.
• Network costs (23.77%) - This is charged to pay for the cost of creating, maintaining and operating the gas pipes and electricity wires that transport energy to your home.
• Operating costs (18.35%) - To cover the cost of running an energy company and pay for things like billing, customer service and IT systems.
• Environmental/social obligation costs (11.34%) - This is to cover initiatives like the Warm Home Discount, as well as government programmes to save energy, reduce emissions and encourage take up of renewable green energy.
• Supplier pre-tax margin (2.82%) - This is your supplier's overall earnings before interest, tax and other costs are deducted, like funding debt payments and government social scheme obligations.
• Other direct costs (1.37%) - This covers administration costs, brokers' costs, intermediaries' sales commissions and any wider smart metering programme costs.

These costs won't be broken down on your energy bill, but will all be incorporated in the unit rate and standing charge.

Your bill will then include a separate charge for VAT, which is currently charged at 5% for households.

This means that, when you check your energy bill, it will show the following information:

1. Your energy supplier's contact details
2. Your customer reference number
3. The date of the bill
4. The billing period
5. The amount of your last payment
6. The cost before VAT is added
7. The amount of VAT to pay
8. The total amount to pay, including
9. The name of your energy tariff
10. A payment slip

A dual fuel bill will also show the meter point administration number (MPAN) and meter point reference number (MPRN) which are the unique numbers used to identify the meters at your property.

How to compare energy prices per kwh

The simplest way to compare energy prices per kWh is to run an energy price comparison with The Energy Shop. We'll show you a range of money-saving deals, alongside how much each could save you if you switch.

To compare energy prices, enter your postcode and house number above, and we'll find a deal to cut the cost of your gas and electric bills. You just then need to choose the deal you prefer, and we'll help you switch energy supplier and save money.