To save money on your electricity bills, the first step is to find out what you're paying. Once you know that, you can start to work out what in your house is using it, and how to cut costs.

How is electricity charged?

Part one: the electricity standing charge

If you have a look at one of your power bills, you will see that your electricity charges are broken down into two parts: the electricity standing charge and the electricity unit rate.

The electricity standing charge is the amount you pay each day for your electricity service, regardless of how much electricity you use. According to the Energy Savings Trust, the average standing charge in the UK in 2021 is 24p per day for electricity on a standard tariff, which comes to £89 per year. 

There are a few UK suppliers which do not charge their customers a daily fee, so if you’re keen to save money on your bills, you can look for a supplier that offers this. However, you will also need to compare electricity unit rates (read on to find out what these are), so you can’t escape doing the rest of the calculations. A switch based only on the standing charge could end up costing you more.

People who travel frequently – who are away for more than half of the time – should look into a no standing charge tariff right away. Be wary of using comparison sites to calculate whether or not this would be cheaper for you. These sites will usually ask you for your monthly usage – but if you’re away a lot, that in itself will vary hugely.

Part two: the electricity unit rate

Your electricity unit rate is the second part of your electricity charge. It is calculated in cost per kilowatt hour (kWh). This is a standard unit of measurement that would keep a 1,000 watt appliances running for one hour.

Getting an idea of the average kWh charge is difficult. According to GoCompare, the 2020 figure was about 17.2p per kWh, but that varies hugely depending on region.

In the United States, the best estimate we can find suggests that the average price a residential customer pays for electricity is about 13.31 cents per kWh, or about 10p.

If you’re paying more than the average, you should look into switching your supplier or your tariff.

Calculating the cost of running an appliance

Once you know your kWh charge, you can start to break down your electricity bill by appliance. To calculate what each device costs to run, choose an appliance and have a look at its wattage label. Multiply the wattage by the number of hours you use it and divide the result by 1,000. 

A very simple example is this: if you pay 17p per kWh and your microwave is 1,000 watt, it will cost you 17p to run it for an hour. Of course, it’s not very likely you’ll use your microwave for an entire hour. But imagine that you run it for at least an hour every week. That means that over the course of the year, your microwave is responsible for about £8.84 of your electricity charges.

GoCompare also has some useful examples of what 1 kWh can do:

  • Boil a kettle 10 times
  • Do the ironing for an hour
  • Run a fridge-freezer for three hours
  • Watch seven hours of television

Downloadable calculator

To simplify your calculations, The Consumer Council has a handy calculator, which you can download from its website. It's based on 2018 figures, so if you want something more up-to-date, this Sust-It calculator is based on 2021 numbers.

I like the Consumer Council version as it's an Excel spreadsheet (and who doesn’t enjoy one of those?) that will show you what you’re spending to run the appliances in your home. Enter your electricity unit rate (it’s the figure in kWh) into the red box and it’ll calculate what each of your appliances uses.

To make the spreadsheet calculations more accurate, you can change the power rating to match what you see on the label of your appliance or electronic device. But even if you use the standard values, it gives you a good sense of the relative cost of each appliance.

The appliances you need to watch out for are ones that can be left on and forgotten. A vacuum cleaner is pretty expensive to run, with an average cost of about 26p per hour. However, you’re not likely to leave it on all night and run up a bill. And your fridge freezer has to be on all the time, so the only way to make savings there is to use it more efficiently.

Here are some rough findings for the biggest culprits in terms of unnecessary energy use. I'm using a 17p tariff for the calculations.

  • If you had a 52” LCD TV and you left it on for 24 hours, it would cost you about 71p in electricity. If you regularly fall asleep in front of your TV, by the end of the year these could be expensive naps.

  • A PC with an 800 watt rating costs more than 14p an hour to run. That means that it would cost over £3.26 if in continuous use for 24 hours.

  • A fan heater is one of the most expensive appliances to run. If you left it on for 24 hours, it would cost you £9.79.

Tips for cutting down your appliances’ electricity use

  • Only boil as much water as you need. Don’t fill the kettle for one or two cups of tea. And while you’re at it, descale the kettle for a more efficient boil.

  • Use portable heaters of all kinds sparingly: these can be extremely expensive to run.

  • Buy a plug-in power meter. This will cost about £10-£20 and you can get one from Amazon (like this one that costs £16.99). It will tell you how much power an appliance is using. It’s especially helpful if you have an old or failing appliance and you want to work out if it will be cheaper to replace it.

Think about standby costs

Some electronic devices will continue to use power even when they’re in standby mode. According to research, UK households waste a combined £470 million per year leaving devices on standby. The Energy Savings Trust estimates that you could save £30 per year on your electricity bill by turning off devices that you'd usually leave in standby mode. 

Which items are using power on standby?

  • Remote-ready devices (the obvious suspects): TVs, games consoles and PC monitors;

  • any device with an LED status light or a digital clock;

  • any device with an attached charger.

If you leave your TV on standby all the time, it could be costing you £14 per annum. Your PC could be costing over £21. And your broadband modem is adding another £20 to your electricity bill.

How to save money on standby costs

Turn devices off when you're not using them, instead of leaving them on standby. If switching them off individually is too much to keep on top of, use smart plugs or a power strip.

Set a time for devices that need charging and unplug them as soon as they're charged.

When you leave a room, switch off everything you're not using.

After more appliances advice? Read on: