Average energy use has fallen – but don't mistake it for a price cut
In the coming weeks the eagle-eyed among you may notice that the price we give for energy tariffs across MSE and in our weekly email will look a little lower than the deals we've been talking about recently. Unfortunately, this isn't due to suppliers cutting prices – it's all down to how regulator Ofgem says we should compare deals.
From today (Wednesday 1 April), Ofgem is changing what it defines as 'typical use'. This is essentially a certain level of electricity and gas use that the energy regulator says a typical household will get through in a year.
While actual household usage varies wildly, the 'typical use' figures help us, and the energy industry, easily compare deals as we can put an average yearly price on each tariff.
Every few years, Ofgem looks at this figure – to make sure it reflects changing patterns of gas and electricity use across the UK – and this time round, it's decided we're all using slightly less electricity (gas is unchanged). So from today, every time we give a tariff price for a typical user, it's based on the assumption of slightly lower use.
However, this amount was worked out before the coronavirus pandemic began, so while it is being implemented now, it doesn't take into account the extra energy we're using by staying at home.
To save on what you pay for your energy, use our Cheap Energy Club to find the best deal for you.
What is typical use?
It's a certain number of kilowatt hours (kWh), a unit used to measure gas and electricity, which Ofgem has calculated to represent what a typical home uses.
It covers low, medium and high users, with standard credit, prepayment and Economy 7 meters.
For the most part, sites like ours will only use medium usage for people with standard gas and electric credit meters.
How has it changed?
It's a very minor change. For medium, typical usage – what we use to compare energy prices – the only difference is lower electricity usage.
Ofgem now thinks the typical household uses slightly less electricity – a total of 2,900 kWh over a year. Before the change, typical use for electricity was set at 3,100 kWh.
Typical gas use has remained the same, at least with medium use, at 12,000 kWh.
So will I be paying less?
No, you'll be paying the same as you were (unless you've recently switched) – no firm's gas or electricity unit rates or standing charges have changed because of this.
It's only average, typical-use prices that will be different, dropping by about £30 to £40 on most tariffs as a result.
However, this is only a measure we use to compare between tariffs – what you actually pay will always depend on your specific usage, the region you live in and the way you pay for your energy.
If you think you're paying too much, the best thing to do is a full market comparison – most can still save £350+/year by switching their energy deal.
Right now, using the new typical usage figures, someone on a big six standard tariff pays £1,126/year on average, while the cheapest deal costs just £750/year. That's a saving of more than £370/year.
Yet some, especially those with higher usage, can save much more – to see what you can save, do a Cheap Energy Club comparison.