How Much Should Bills Be Per Month?

We’ve been asked this question several times by customers, potential customers and those generally interested in the energy industry. Unfortunately, there’s no one-size-fits-all answer to this question, so, we will use this page to go through the different factors that affect bill pricing.

What do the energy companies have to pay?

To start this discussion of ‘How much should bills be per month?’, we are going to talk about the costs that the suppliers must pay, to give an idea of why energy is not as cheap as we’d like.

• Generation costs
• Network costs
• Retail costs
• Government costs

Generation costs cover the cost of running the power plants, and will vary depending on who owns and runs the facilities. Some will be able to run the operations on a smaller budget, and be able to pass on cost savings to customers, but this isn’t always the case. Network costs are generally fixed, and all suppliers pay the same amount, which is decided by Ofgem. Retail costs look at the cost of office staff to handle accounts and switching, as well as the purchasing of energy in bulk from other suppliers (to get good deals). Government costs include obligatory charges, like the one that goes towards improving renewable energy infrastructure (energy suppliers pay billions towards this, and then pass the charges on to customers).

How much should bills be per month? – Fixed vs Variable

When you opt for a fixed rate contract, it means you will be paying the same price for your energy every month, per unit, depending on how much you use. This means that if, when you subscribe, the price per unit seems to be quite low, it’s a good time to sign up. However, market fluctuations can happen very quickly, and very soon this fixed rate that you pay can become more expensive than competitor tariffs. Usually it costs £60 to switch supplier, though it’s becoming quite common that the exit fees are waived (meaning the price is integrated into the energy prices). For many homeowners, playing the safe option with fixed rates means you will have a good insight in to ‘How much should bills be per month?’.

If you opt for a variable tariff, you may be taking an even greater risk, but this risk can go either way. On the one hand, if prices continually drop, you will benefit, but if they continually rise, you will pay more. Generally, they go up and down through the year and the price will be quite similar to the fixed rate, but this cannot be guaranteed. One benefit to variable tariffs is that it’s a good opportunity to learn about the energy market, allowing you to gain an even better grip on your future energy decisions.

How much should bills be per month? – Based on how big your home is

Two of the largest factors when it comes to how much your energy bills cost, are the number of occupants and the size of the home. With a larger home, you will need to use more gas to heat the property, and depending on how old or poorly insulated the property is, this could go up further. If you have a studio apartment, the number of appliances you will use, or have sat on standby, will be massively reduced in comparison to a five-bedroom house, meaning naturally your energy bills will be a lot lower.

Take all of these things into consideration and you will be able to find a rough estimate for the answer to ‘How much should bills be per month?’ that is applicable to your circumstances.