Looking to save some money? Well, then an energy supplier that offers a cheap tariff might be the best option for you. However, it is important to note that the cheapest gas supplier is not necessarily the best. There are other factors involved such as customer service, accurate billing and smart meters. Plus there are the environmental considerations. For many people finding a supplier who offsets their gas or also offers green electricity is an important factor.
Last update: May 2021
However, knowing the cheapest gas supplier can help you to make an informed decision. This guide aims to tell you everything you need to know.
Heating our homes and having access to hot water, as and when we need it, are essential basics for everyday life. Of course, for most of us that means paying for an energy supply. And for 86% of homes in the UK that means using the natural gas mains connection – that’s around 23 million properties across the country. However, just because gas is an essential service that doesn’t mean we want to be paying any more for it than we should be. Read on to find out more about the cheapest gas supplier.
Who is the UK’s cheapest gas supplier?
The four cheapest gas suppliers in the UK offering tariffs in 2020 are:
- Gulf Gas & Power UK: £335 a year
- EDF Energy: £374 a year
- Zog Energy: £375 a year
- Entice Energy: £375 a year
These gas prices are based on the average consumption of around 12,500 kWh per year. However, these are just the basic prices for gas, so you also need to bear in mind exit fees and other associated costs for tariffs that may apply. You should also remember that your own bill may vary depending on the size of your home and number of occupants.
Which energy supplier has the cheapest standing charge?
Standing charges are the fees we pay each day for the energy supply to be connected to our homes. So, as well as paying for the amount of gas we consume, we also pay a daily rate for the connection. These can vary and will affect the cost of your supply and bill amount each month.
The standing charge covers:
- Using and maintaining the energy networks such as the pipes that carry gas around the country
- Keeping your home connected to the mains
- Meter readings
- Payments towards government initiatives
Gas standing charges in the UK can vary between 10p and 80p per day, depending on your tariff. The national average is £85 a year but some people pay as much as £250. There is talk Ofgem, the industry regulator, putting a cap on standing charge prices which would benefit low income households.
There are some energy suppliers who do not use a standing charge or set a rate at £0 on your bill. This means you only pay for the energy you use, which is great news for occasional use properties such as holiday homes. However, the energy unit rates are usually much higher and medium to high users will usually end up paying more. Currently there are two suppliers offering zero standing charges. These are Ebico Zero Green Fixed and Utilita’s Smart Energy.
A standing charge close to 10p day is about as low as it goes. For most of the Big Six, gas standing charges are around 25p to 27p per day.
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What country has the cheapest gas?
Within Europe, Ukraine has the cheapest natural gas thanks to a large supply of the resource. Sweden pays the most, followed by the UK, Switzerland and Belgium. However, there are some countries in areas where gas reserves are very good where prices are even lower still. This included several countries in Central Asia.
Is gas free in any country?
Turkmenistan has offered free energy, including gas and electricity to all its citizens. However, they made a move away from this policy, describing it as ‘ineffective’. Every citizen was entitled to 50 cubic metres of gas each month but this ended in 2014, with only people with lower incomes receiving this benefit.
Wholesale gas market price vs retail price
The price that a supplier buys the gas from in large volumes is called the wholesale price. The amount we pay for it as consumers is called the retail price. The difference between these two is the profit and running costs of the supplier. So, just how big is the difference between wholesale and retail prices.
Obviously it depends on the company, as every provider both buys and sells at different rates according to their own business model. However, on average in the UK supplier costs and margins make up around 67% of the consumer bill. This is by far the highest component of your gas bill.
Other charges on your bill include:
- 16% distribution charges
- 2% transmission charges
- 6% environmental charges
- 5% VAT
- 4% other
Wholesale gas price evolution and reasons
The price of gas in the United Kingdom is expected to be about 37.6 pence per therm by 2024/25. This would equal a 38% decrease compared to 2018/19, when gas prices reached a peak of 60.7 pence per therm.
The reasons for this decrease are to do with the supply and demand. If supply is set to increase in the coming years from various sources, then this will result in a drop in prices. Supply side fluctuations are caused by factors such as global reserves, cost of transportation and regional stability.
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Updated on 23 Jul, 2021