Utility bills: what can you expect to pay?

·6-min read
 (Pixabay)
(Pixabay)

The broad term ‘utilities’ is used to cover the essential services that we use in our homes on a daily basis, such as gas, electricity and water. With the crucial communications role that the internet now plays in many of our lives, most people would categorise broadband as a utility as well.

Utility bills include a breakdown of the charges incurred and offer various payment options.

Most households also have to pay council tax to their local authority, a bill that essentially covers council-provided services to a local area.

Here’s a look at how utility bills are calculated, how much the typical household pays, and how to save money on them.

Related: Switch & Save Using Our Energy Comparison Service

Gas bills

Who issues my gas bill? It’s a fair question, as there are more than 50 energy companies supplying gas to residential homes in the UK. Large providers include British Gas, E.ON (which has taken over nPower), EDF, Scottish Power and Ovo (which also runs SSE’s domestic business), but there are loads of smaller suppliers too. The supplier you choose is up to you.

How’s my gas bill calculated?

Gas bills are calculated based on how much gas your household uses. Your bill will be split into a daily standing charge, plus a unit charge. Units are measured in kilowatt hours, or kWh.

For example, if a kettle uses 1,200 watts (1.2kW) per boil and takes 125 seconds to do so, that works out to 0.04kWh (1.2kW x 125/3600).

How much is the typical gas bill?

According to the energy regulator, Ofgem, the average annual gas bill for 2020 was £557, or about £46 a month. The easiest way to pay your gas bill is by monthly direct debit, although you can opt to receive a quarterly bill.

How can I save money?

The obvious reduction you can make to your bill is by using less gas. You can also save money by shopping around for the cheapest tariff. Gas tariffs combined with electricity (‘dual fuel’ tariffs), managed online and paid by direct debit, are usually cheapest.

Electricity bills

Who issues my electricity bill? Most energy suppliers offer both gas and electricity. Alongside the familiar names listed for gas earlier, other popular suppliers include Bulb and Octopus Energy. You can choose which supplier you sign up with.

How is my electricity bill calculated?

It’s a similar story to the one for gas. You’re billed for electricity based on how much you use. You’ll pay a standing charge, plus a unit charge measured in KWh.

How much is the typical electricity bill and when is payment due?

For 2020, the average electricity bill was £707 or £59 a month. As with gas, you can pay by direct debit or on receipt of your bill. If you have a pre-payment meter (often found in rented accommodation) you pay for your energy before you use it.

How can I save money?

The less electricity you use, the less you’ll pay. You should also shop around for the best tariff and review this each year. If you’re on a pre-payment meter but are allowed to make the switch, changing to a post-pay meter will give you access to cheaper tariffs.

Related: Switch & Save Using Our Energy Comparison Service

Water bills

As far as utility providers go, water is different to gas and electricity because you don’t have any choice about your supplier. Your home will fall into one of 26 water areas, each of which is supplied by a different water company.

How is my water bill calculated?

If you have a water meter installed, your bill will be calculated on how much water you use. If you don’t have a meter, you’ll be billed according to the ‘rateable value’ of your property.

Water bills are broken down into a fixed charge, a charge for ‘clean’ water, and a fee for wastewater.

How much is the typical water bill and when is payment due?

According to the industry organisation Water UK, the typical household pays £397 a year for water, or £33 a month. Most people pay their bill in 12 monthly instalments via direct debit. You can also pay online, on the phone or at a PayPoint or Post Office.

If you have a water meter, adjustments to your account are made at the end of the year to account for how much water you actually used.

How can I save money?

If you have more bedrooms than people living in your home, you’ll probably save money with a water meter.

If you can’t have a water meter fitted due to a shared supply or inaccessible pipework, you can ask your water company for an ‘assessed household charge’ based on the average metered bill for the number of bedrooms your home has.

If you live alone, you can request the ‘single occupier tariff’ which will be cheaper.

Broadband

There are more than 200 broadband firms in the UK, but most customers have contracts with one of the main players, namely, BT, Sky, Talk Talk or Virgin Media.

How is my broadband bill calculated?

Almost all broadband deals offer unlimited internet access for a fixed monthly price. The price will depend on your supplier, broadband speed, contract length, and whether you bundle broadband with a home phone or TV service.

How much does broadband cost?

According to the government-backed organisation MoneyHelper, the average broadband bill is about £27 a month. Broadband is billed monthly, although some deals also have a set-up cost.

How can I save money on broadband?

Make sure you shop around for your broadband, especially when your initial contract term comes to an end. In general, the faster your broadband, the more expensive it will be. Signing up for a 12 or 24-month contract will be cheaper than a 30-day rolling tariff.

Council tax

Your local authority sends your council tax bill.How much you pay depends on the ‘valuation band’ your property falls into. These were worked out in 1991.

In theory, the more expensive your property, the more you’ll pay. However, bills vary between local authorities. So properties of equal value located in different areas won’t necessarily pay the same amount even if they share the same band.

How much is the council tax bill and when is payment due?

The average Band D council tax bill set by local authorities in England for 2021-22 is £1,898.

You’ll be sent your annual council tax bill in April each year. You can choose to pay this upfront or half yearly, but many people pay by direct debit over 10 months from April to January. You can usually also opt to pay your bill in 12 monthly instalments.

How can I save money?

If you live alone, apply for the single person discount of 25%. Households made up entirely of students don’t pay council tax at all. You might be eligible for a discount if you’re unemployed, on a low income, a carer, or disabled.

Who pays utility bills if you’re renting?

If you rent in the private rented sector, you’ll normally need to pay all your utility bills and council tax. If you rent from the council, your water bill might be included in your rent.

If you live in a house of multiple occupation (HMO), your landlord may include bills in the rent – so check your tenancy agreement. Bills might also be included in your rent if you are a lodger living with a landlord who owns the property.

Related: Switch & Save Using Our Energy Comparison Service

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