Most people who compare energy tariffs make the same mistake: they look at the headline annual cost and stop there. That figure is calculated using Ofgem’s typical consumption assumptions — which may bear no resemblance to how much energy your household actually uses. Here is how to compare tariffs correctly.

Step One: Get Your Actual Annual Usage

Your annual kWh usage is on your energy bill or in your online account. You need two numbers: annual electricity usage in kWh and annual gas usage in kWh. If you have only been in a property a short time, ask your supplier for the previous occupant’s usage or use your smart meter data. Ofgem’s typical household uses 2,700 kWh of electricity and 11,500 kWh of gas — but a 1-bed flat might use 1,500 kWh electricity and 5,000 kWh gas. Using the wrong figures gives you a completely misleading comparison.

Step Two: Understand the Two Cost Components

Every tariff has two charges you must account for:

• Unit rate (p/kWh) — what you pay per unit consumed. This is the number most people focus on.
• Standing charge (p/day) — a fixed daily charge regardless of usage, typically £200-£250/year combined for gas and electricity. This is the number most people ignore.

A tariff with a low unit rate but high standing charge can cost more overall if your usage is low. A tariff with a high unit rate but zero standing charge (rare, but some exist) can win for low-usage households.

Step Three: Calculate Total Annual Cost for Your Usage

The formula: (your annual kWh × unit rate) + (365 × standing charge per day). Do this for gas and electricity separately, then add together. This gives you a true like-for-like comparison between any tariffs you are considering.

Step Four: Factor in Tariff Type and Length

• Fixed tariffs: Rates locked for 12-24 months. Exit fees if you leave early. Good for certainty.
• Variable tariffs: Track the Ofgem cap. No exit fees. Rates change quarterly.
• Time-of-use tariffs: Different rates at different times of day. Can be excellent value if you can shift usage to off-peak hours.

Use Ofgem-Accredited Comparison Sites

Only Ofgem-accredited sites are required to show you all available deals — not just those that pay them the highest commission. Uswitch, MoneySuperMarket, Compare the Market, and Go.Compare all hold accreditation. Enter your actual kWh figures, not just your postcode, for accurate results. Ready to cut your energy costs? Compare deals today.