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Gas Costs and Household Budgets

Gas is a key expenditure of any UK household. In 2013, the average UK household consumed gas of 15,000 kWh/year and got an annual domestic gas bill of £702.

Are gas costs increasing?

When compared to the 2013 expense, the annual expenditure on gas was only £250 in 2003. As you can see prices have almost trebled in the last ten years. This increase is much higher than the average increase in wages.

How can you save on your gas bills?

Apart from controlling gas consumption, you can save on your gas bills by choosing the most cost-effective service provider. Deal sites such as Energyhelpline.com can suggest various alternatives to your current provider based on your annual spend/consumption and your postal code. Before switching, however, you need to verify if your present plan has any cancellation fees.

Example:

Suppose you live in Manchester and your postcode is M1 1AD. Your annual gas consumption is 15,500 kWh per year. Under your current plan, you are paying around £837 per year on gas expenses. If you go to a deal site, and enter these details, you may get a deal as low as £612 per year. This is a fixed price arrangement, under which you are paying a fixed price of 3.459p per kWh for six months.

Fixed versus variable pricing

Gas can be priced either at fixed or variable rate per unit. As in the example above, in the fixed method, the prices are fixed for a set period. Under variable rates, your service provider can increase unit prices at any time to match external prices. The deal site may offer you an annual gas fee of £698 at a variable rate of 4.029p per kWh, using the same data.

The fixed method allows you to better predict your household gas expense as long as consumption is consistent. With the variable method, even if you keep your consumption consistent, your expenses can vary from your budget.

Savings by choice of payment method

Your choice of method for paying the gas bill can also result in some savings. The direct debit method of paying gas bill provides the maximum savings. The above examples have considered the direct debit method. If all other things are the same, and you choose the payment on receipt method, the lowest deal will be £671 each year as opposed to the £612 under monthly direct debit.

You can use our household budget calculator to see how gas expense influences your household budget. If you find out that the expenditure on gas is taking up a larger proportion of your budget, you should consider switching your service provider.

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