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Why Energy Prices Vary Depending On Where You Are In The UK

We all know that a lot can change in terms of business and domestic energy. Wholesale energy prices fluctuate as the demand for energy changes. In fact, we have faced countless tariff hikes that have already occurred in the previous months. 

How much you pay for the energy you consume naturally depends on a lot of factors. This includes your energy supplier, the weather, and of course, the amount of energy you use yearly. In addition, where you live and/or the location of your company always plays a major role in electricity and gas prices. Energy suppliers for both business and household customers also price their supply based on where they source electricity and gas.

If you haven’t checked your energy prices for a long time, you might already be paying more than you should; especially if it is known that the area in which your company is located has expensive tariffs for gas and electricity. 

It goes without saying that comparing business energy prices and providing your business postcode will also play a part in determining whether or not you are on an expensive tariff. On top of that, you’ll be able to strike the best deals in your region that could save you a huge amount of money! 

But what else causes these price differences? What makes one region more expensive than the other? And why are energy prices in the UK continuously rising? Let’s find out:

The reason behind regional energy price variations: 

The causes are innumerable, but we’ve narrowed it all down to 4 known reasons as to why energy prices vary from region to region:  

  1. The volume of energy consumers the energy provider has in a region 

Basically, it all boils down to supply and demand. Let’s say your business is located in an area where there are relatively few people, then the per-kWh cost will be increased significantly. 

Inversely, if the energy supplier is aware of the massive volume of consumers that they will be serving, they may be able to buy in bulk from generators at a discounted rate. That means densely populated areas are able to face a low-cost per-unit. 

  1. The amount of energy your supplier purchases from generators

Electricity and gas companies buy their supplies from generators in advance. These purchases are always based on estimates and predictions with regards to demand in an area. 

It is possible that these estimates may be inaccurate at times. When they are, these miscalculations could cause prices to rise significantly, especially if the energy company ends up needing more supply at short notice.

  1. The fee that energy suppliers pay Local Distribution Networks 

Energy suppliers need assistance with distributing energy into homes and businesses. That’s where Local Distribution Networks come into play.  They operate electric wires and gas pipes that mainly carry energy into different premises across the United Kingdom.

The energy companies are responsible for paying these networks a fee in order to push through with the energy distribution. There are currently 14 main distribution networks in the UK, and they are all owned by six different companies which all charge a different fee.

  1. How much energy is being consumed in your region

Energy demand differs in each region. For instance, Scotland and the North East are both cold regions where customers are more likely to be electricity-intensive due to the continuous use of heaters. 

What are the energy price differences per region?

It’s great that you finally know why energy prices vary considerably depending on where you are in the UK, now it’s time to discuss the price difference per region. Below is a list of AVERAGE annual costs of electricity and gas per region.* This is official data taken from Ofgem

RegionAverage cost of electricity and gas
North Scotland£1,376
South East£1,362
Merseyside & North Wales£1,350
South Wales£1,345
Southern£1,340
West Midlands£1,332
Eastern£1,312
South Scotland£1,309
North West£1,301
East Midlands£1,300
North East£1,288
Yorkshire£1,283

*We were not able to find data for businesses per region. So the breakdown of figures listed above are from annual domestic bills for both gas and electricity. 

Again, these are all just average rates. So if you are much more energy-intensive than most consumers in your area, understandably, you will end up paying higher bills no matter where you are in the country. 

What do energy prices consist of?

Wholesale gas and electricity make up most of your energy bill (about 40%). Network costs come second, which—as we mentioned previously—are the fees energy suppliers pay to have energy distributed to consumers. The other constituents include government and environmental taxes such as VAT and CCL. Learn more about each important factor of the energy bill here.

So, if there is a significant increase in energy bills, the wholesale cost of gas and electricity could be the underlying cause, followed by distribution and other costs. 

However, keep in mind that there are many energy companies across the UK that currently operate as private companies, meaning they can change their prices whenever they want. 

Which region In the UK has the most expensive energy tariffs? 

Electricity and gas bills in the UK always vary from region to region. For example, if you’re someone from London, it doesn’t matter whether you’re in the same circumstances or use the same amount of energy as someone in Yorkshire – you will both end up paying different amounts for your utility bill.

Based on Ofgem’s 2019 report, London was indeed one of the cities with the most expensive average electricity rates. While the North East, on the other hand, had the cheapest electricity on average. 

The cheapest gas bills could be found in Yorkshire, while people who reside and work in the South East have paid the most for their gas bills. 

We’ve learned that these rates were greatly affected by the different network costs that have been associated per region. 

The United Kingdom as a WHOLE has the second-lowest unit price for gas in the entirety of Europe (at an average of 2.5 p/kWh). Although the UK has the 10th most expensive electricity rates at over 8.7 p/kWh — so it would be best to take this into consideration when you feel like the energy bills in your region are exceptionally high. 

The cost of electricity and gas per region

As of 2020, London is still among one of the cheapest cities in the UK for annual energy bills* with an average of £770. On the contrary, Galloway and Dumfries have been known to be the most expensive areas as far as utility bills go, with its residents paying at least £2,500 yearly. That’s 3 times more than what London, Milton Keynes, and Manchester residents pay! 

Is there any way to decrease my energy bills if I am in an expensive area or region of the UK? 

Yes, of course, there are still tangible ways for you to lower your business energy bills no matter where you are in the UK.  

During the nationwide Coronavirus lockdown that took place earlier this year, around 48-49% of energy consumers have been looking for numerous ways to lower their energy bills as many have resorted to continue and manage their businesses at home. This has left pure worry and concern for thousands of residents as they do not want to be overcharged by their energy providers during these difficult times. 

Luckily, we’re here to fill you in on a bunch of cost-effective ways that may help decrease your electricity and gas bills to help you save on your forthcoming bills!

First and foremost, we suggest doing simple things such as using less energy and keeping your premises in check. You should also do the following:

  • Make sure that all your office and home appliances are in good condition, clean (such as air conditioning filters), and energy-efficient (inverter appliances are the way to go).
  • Replace your light bulbs with energy-saving ones, such as CFL or LED. These types of light bulbs use less energy as opposed to regular bulbs. Also, make it a habit to turn off the lights when they are no longer in use.
  • Turn your thermostat down 1 degree! Doing this might help you save at least £62.27 a year! 

During the summertime, you can wear lightweight and breathable clothing to work or at home, use electric fans, schedule when the A/C should be turned on, and avoid using heat emitting appliances such as ovens and toasters to stay cool! 

If you’re looking for other ways to stay warm during winter, and putting your heater on in full blast is out of the question, you can try opting for an electric blanket or chair warmers that you can use in the office, by your desk, or even at home. Additionally, sipping on warm drinks such as coffee, hot chocolate, and tea will do wonders in keeping your body temperature at bay. Wear comfortable sweaters and thick socks that are enough to keep you warm. There are also plenty of energy-efficient space heaters in the market! This type of heater is great for moving around the room or office. This is a lot cheaper than having an entire heating system installed within your premises if it is something that is way out of your budget. 

On the flip-side, if you have a little extra cash on you, try investing in a smart thermostat! This is going to be a great upgrade for your business since you’ll no longer have to manually dial your thermostat up and down in the middle of the day. With the help of a smart thermostat, you can easily sync it with your smartphone or tablet through an application which can then control the heating and cooling within your premises. It also makes it possible to set schedules for setting temperatures!

Easier methods that can help reduce your energy bills: 

  • The simplest way to reduce the cost of your business utility bills is to actually make sure you are on the cheapest contract in your area! If you are unsure about your current tariff, you can easily find out by running a comparing business energy prices on the regular. This will help you find better deals in your region! Comparison sites such as ours are free and quick to use. In fact, all we really need is your energy usage data, your postcode, contact details, and that’s pretty much it! In less than 10 minutes, our team will provide you with HUNDREDS of unbiased business energy quotes that are available in your area. Afterwards, you will be able to determine how much money you’ll be able to save should you decide to switch to another supplier. The more deals you have on your hands and the more tariffs you get to compare, the better the chances of saving thousands on your energy bills and avoiding ridiculous price hikes! 

Learn how to save at least £1,100 on your business energy bill! 

How do I know if I’m about to choose the best tariff option in my region?

Aside from collecting business energy quotes and running a comparison, we recommend choosing a fixed or capped tariff if you’re fine with signing a contract that will usually last 2-5 years. 

This type of contract is excellent, as you will not be affected if the prices go up in the market. So it’s great for customers that are on a tight budget. The cost of your energy remains the same for the duration of your contract if you pay by Direct Debit. The only thing that can affect your bill is your energy consumption. 

However, bear in mind that if you will be charged a significant amount of money should you plan on switching to a different supplier or tariff early. This fee is called an exit fee and it’s often expensive. 

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