Summary
Energy bills are made from fixed and variable parts. The standing charge is paid each day regardless of usage. The unit rate is paid for each kWh of electricity or gas used. Meter type, payment method, region and tariff all affect the final bill.
The Ofgem price cap is often misunderstood. It is not a cap on the total household bill. It limits standing charges and unit rates for customers on default or standard variable tariffs, with rates varying by region and payment method. For budgeting, use Typical Domestic Consumption Values as a starting benchmark, then adjust for the actual property, insulation, heating type, occupancy and working from home pattern.
Definition
An energy bill is the recurring cost of electricity and gas usage, calculated from a fixed daily standing charge plus variable kWh usage charged at the applicable unit rate. TDCVs are benchmark annual usage figures used to model typical household consumption, while the Ofgem price cap is updated quarterly and limits default tariff rates rather than total spend.