ENERGY BILLS EXPLAINED
Your unit rate is the single most important figure on your energy bill. It is the price you pay per kilowatt-hour of gas or electricity you consume. This guide explains what unit rates are, how they work, and how to use them when comparing tariffs.
THE BASICS
A unit rate is the price you pay per kilowatt-hour (kWh) of energy you consume. It is measured and quoted in pence per kilowatt-hour (p/kWh). Every unit of gas or electricity you use is multiplied by your unit rate to calculate the consumption portion of your bill.
Gas and electricity have separate unit rates. They are usually different because gas and electricity are generated, transported, and priced through different wholesale markets and distribution networks.
Under the July 2026 Ofgem price cap, the national average electricity unit rate for direct debit customers is 26.11p per kWh. The national average gas unit rate is 7.33p per kWh. This means electricity costs roughly 3.5 times more per unit than gas -- which is why gas central heating is typically cheaper to run than equivalent electric heating.
See rates for your postcode: Find my regional ratesTWO COMPONENTS
Your energy bill has two distinct cost components. Understanding both helps you compare tariffs accurately.
The unit rate applies to every kWh of energy you actually consume. If you use more energy, you pay more. If you use less, you pay less. The unit rate is the main cost driver for most households and the primary figure to focus on when comparing tariffs.
Current rate (July 2026):
26.11p/kWh
7.33p/kWh
Electricity and gas respectively
The standing charge is a fixed daily amount you pay regardless of how much energy you use. It covers the cost of maintaining your connection to the gas and electricity networks. You pay it every day whether you use energy or not.
Current charge (July 2026):
57.19p/day (£208.74/year)
29.04p/day (£106.00/year)
Electricity and gas respectively
MoneySavingExpert founder Martin Lewis has described standing charges as resembling a poll tax, noting that households must pay over £300 per year simply for the facility of having gas and electricity connected. From July 2026 the combined standing charge for a typical dual fuel household is £314.74 per year before a single unit of energy is consumed.
REGIONAL VARIATION
The UK's electricity and gas networks are divided into 14 regional distribution areas, each managed by a different network operator. These operators have different infrastructure costs depending on the density and age of the network in their area, the geography they serve, and the level of maintenance required.
Suppliers are charged different amounts to use each regional network. These costs are passed on to customers in the region through slightly different unit rates and standing charges. This is why a tariff from the same supplier with the same name can cost different amounts depending on your postcode.
The Ofgem price cap accounts for regional variation by setting different maximum unit rates and standing charges for each of the 14 regions. The national average figures quoted in Ofgem's headline cap announcements are a weighted average across all regions.
See the rates for all 14 regions →| Region | Elec unit rate |
|---|---|
| North West | 26.13p/kWh |
| London | 26.35p/kWh |
| Yorkshire | 25.31p/kWh |
| Northern | 25.22p/kWh |
| N Wales and Mersey | 27.66p/kWh |
YOUR BILL
Your unit rates appear on your energy bill or annual statement. Most suppliers now provide these digitally through their app or online account. Look for a section headed 'tariff details', 'rates', or 'your charges'.
Your bill will show separate rates for gas and electricity. Each will show a unit rate in pence per kWh and a standing charge in pence per day. These are the two figures you need to compare tariffs accurately.
Write down your unit rate alongside your annual usage in kWh. Both figures appear on an annual energy statement, which your supplier must send once a year. These two numbers are what comparison tools use to calculate your estimated annual cost.
Check your unit rate against the current Ofgem price cap rate for your region. If your rate is significantly above the cap, you may be on an older contract. If it matches the cap, you are likely on a standard variable tariff.
COMPARING TARIFFS
When comparing energy tariffs, the unit rate is the primary variable that determines how much your energy costs. The lower your unit rate, the less you pay for each kWh you use. However, unit rates should always be considered alongside standing charges to get a true comparison.
For households that use above-average amounts of energy, the unit rate has a proportionally larger impact on total cost. A 1p/kWh reduction saves more per year for a household using 4,000 kWh than one using 2,000 kWh. For high-usage households, finding the lowest unit rate is typically the highest priority when comparing.
For households with low energy consumption, the standing charge can represent a higher proportion of the total bill. A tariff with a very low or zero standing charge may work out cheaper overall even if the unit rate is slightly higher. The standing charge calculator at Utility Matchmaker can help model this.
For households near Ofgem's typical consumption values (2,700 kWh electricity, 11,500 kWh gas), both unit rate and standing charge matter roughly equally. Using the annual bill estimator with actual usage figures gives the most accurate comparison.
Tools to help you compare:
COMMON QUESTIONS
A kilowatt-hour is a unit of energy equal to using 1,000 watts of power for one hour. As everyday reference points: boiling a full kettle uses roughly 0.1 kWh, a washing machine cycle uses 0.5 to 1.5 kWh, and leaving a 10-watt LED bulb on for 100 hours uses 1 kWh. Your annual usage in kWh is shown on your bill or annual energy statement.
The Ofgem price cap sets national average rates but actual rates vary by region. Your unit rate depends on which of the 14 distribution network areas your property is in. If your rate is significantly above the regional cap rate, you may be on an older fixed deal or a non-standard tariff. Check your tariff documentation or contact your supplier.
Yes. The price cap sets the maximum rates suppliers can charge on standard variable tariffs. Fixed tariffs are not subject to the cap and can be priced above or below it. Fixed tariffs are currently available below the July 2026 cap level from several suppliers. Compare at your postcode to see what is available.
All energy bills include VAT at 5%. The unit rates shown on price cap announcements and on this site are inclusive of 5% VAT. This is lower than the standard 20% VAT rate which applies to most other goods and services. The reduced rate has applied to domestic energy since 1997.
On a standard variable tariff, unit rates change each time the Ofgem price cap changes -- quarterly on 1 January, 1 April, 1 July, and 1 October. On a fixed tariff, your unit rate is locked for the duration of your contract regardless of cap changes.
Enter your postcode to see the exact unit rates and standing charges that apply to your distribution network area under the July 2026 price cap.