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Freedom251 › Blog › dynamic pricing

How to Compare Gas and Electric Plans When Energy Prices Are Volatile

By Freedom251 Team · · 10 min read

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Compare the annual cost of gas and electricity separately, using your actual 12-month kWh consumption, then add the two totals. Do not choose a plan from its monthly direct-debit estimate or headline unit rate. Include standing charges, taxes, payment-method pricing, discounts, exit fees and any meter requirements, then test the result against mild, typical and cold-weather use and plausible price changes.

Start with the cost you can actually compare

Every offer should be reduced to an annual gas cost, an annual electricity cost and a combined annual cost. The basic calculation for each fuel is:

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(annual kWh × unit rate) + (365 × daily standing charge) + taxes and other stated charges

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Apply the calculation separately to gas and electricity because their unit rates, usage patterns, taxes and standing charges are different. Add one-off connection or administration fees, exit fees, discounts that genuinely apply to your account, and any payment or meter conditions. If an offer has different prices by time of day, calculate each time band from the kWh you expect to use in that band.

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A supplier’s monthly direct-debit figure is a budgeting estimate, not a comparable price. It may be based on an assumed annual consumption, a credit balance, a payment method or a forecast that does not match your home. Ofgem explains that suppliers charge a unit rate and a daily standing charge, while the price cap limits those rates rather than the household’s total bill. A home using more energy therefore pays more even when both homes are on the capped tariff.

The information to collect before requesting quotes

  • Gas and electricity kWh for the latest 12 months, copied from bills or meter readings.
  • Monthly or seasonal usage, so winter and summer consumption are not averaged blindly.
  • Meter type: traditional, smart, prepayment or a time-of-use meter.
  • Your payment method: direct debit, credit or prepayment.
  • Your current unit rates, standing charges, contract end date and exit fee.
  • Whether you have an electric vehicle, heat pump, storage battery, solar panels or other flexible loads.
  • Your location and postcode, because tariffs, taxes, network charges, protections and comparison services vary by country and utility territory.

Calculate offers with a worksheet

Use one row per offer and separate columns for gas and electricity. Record the rate exactly as quoted, including pence or cents per kWh and the daily standing charge. Keep the quotation date and the period for which the rate applies.

Item Gas Electricity
Annual consumption (kWh) Your 12-month gas total Your 12-month electricity total
Unit rate Quoted gas rate Quoted electricity rate
Energy charge Gas kWh × gas rate Electricity kWh × electricity rate
Standing charge 365 × gas daily charge 365 × electricity daily charge
Taxes and other charges As stated in the offer As stated in the offer
Discounts and fees Apply only if eligible Apply only if eligible
Annual total Sum of the above Sum of the above

Then add the gas and electricity totals. Repeat the calculation for your current plan, each single-fuel alternative and any dual-fuel offer. A low electricity rate can be paired with an expensive gas rate, and the reverse can also happen.

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Worked example with deliberately generic rates

Suppose a home uses 11,500 kWh of gas and 3,200 kWh of electricity in a year. An offer quotes gas at 6.5 pence per kWh with a 30 pence daily standing charge, and electricity at 28 pence per kWh with a 55 pence daily standing charge. Before taxes, fees and discounts:

  • Gas energy: 11,500 × £0.065 = £747.50.
  • Gas standing charge: 365 × £0.30 = £109.50.
  • Electricity energy: 3,200 × £0.28 = £896.
  • Electricity standing charge: 365 × £0.55 = £200.75.
  • Subtotal: £1,953.75.

The subtotal is not a bill unless the quoted rates already include every applicable charge. Add taxes and stated fees, subtract an eligible discount once, and preserve the qualification attached to each figure. This method lets you see whether a claimed saving comes from a real rate difference or merely from a different usage assumption.

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Understand what each tariff label commits you to

Tariff type How the price changes When it may fit Main risk
Fixed Specified price components stay fixed for the contract term, subject to changes the contract expressly permits, such as a tax or regulated-charge change. Households that need predictable payments or cannot tolerate a winter price spike. You can be locked into an expensive rate if market prices fall; an exit fee may apply.
Variable or standard variable Unit rates can rise or fall with market and regulatory changes. In the UK, Ofgem’s cap protects standard-variable customers, but not customers who agreed a fixed tariff. People who value flexibility and can absorb changing bills. A rise in rates increases your bill immediately or at the supplier’s stated review points.
Indexed The price follows a published reference with a stated formula and review schedule. France’s gas reference changes monthly and its regulated electricity reference can change in February and August; other jurisdictions use different schedules. Customers willing to follow an index and accept regular adjustments. The index, timing or pass-through component may be misunderstood.
Market-indexed A wholesale or other public market index determines a stated component, with the supplier specifying which component and how often it changes. Informed customers who can monitor the reference and manage volatility. Wholesale movements can be rapid and may not match your household budget.
Dynamic or time-of-use Prices vary by market period, sometimes close to real time, rather than using one rate all day. Homes with smart meters and flexible loads such as EV charging, laundry or batteries. Using electricity during expensive periods can erase the benefit; variability is high.

CRE describes dynamic offers as intended for consumers who can move some consumption and are open to energy-price variability. A “fixed” label still requires reading the contract: a fully fixed offer may allow only tax changes, while a partly fixed offer can pass through specified regulated components.

Stress-test the quoted annual cost

A single forecast hides the risk that matters when prices are volatile. Build at least three usage cases and several price cases.

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Usage cases

  • Mild year: lower heating demand and your lowest credible gas consumption.
  • Typical year: the latest 12-month kWh total, adjusted only when you know a change is permanent.
  • Cold year: a winter with materially higher heating demand. Use a historic high from your bills if available rather than inventing a universal percentage.

Apply the same scenarios to electricity where weather affects heating, cooling or heat-pump use. Keep a separate scenario for a new EV, appliance or occupancy change; otherwise an old bill can make a new tariff look artificially cheap.

Price cases

For variable, indexed and dynamic offers, recalculate with plausible increases and decreases in the variable component. For a fixed offer, model the cost during the fixed term and the tariff you would move to when it ends. Include the contract’s permitted tax or regulated-charge changes. A plan that wins only if prices rise sharply is a risk decision, not a guaranteed saving.

Check the break-even point: how much would the variable rate have to rise before a fixed offer becomes cheaper, after its standing-charge difference and exit fee? This is more useful than a supplier’s claimed monthly saving because it exposes the assumption behind the claim.

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Why gas and electricity prices do not move together

Your retail bill combines wholesale energy, networks, policy schemes, supplier operating costs, risk allowances, taxes and payment arrangements. Ofgem includes these components in its price-cap methodology. The European Commission says EU electricity prices rose sharply from 2021 to 2023, driven mainly by fossil-fuel prices, especially gas used in power generation; wholesale prices later stabilised but remained above historical averages.

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Electricity and gas also deliver different useful energy services. Comparing only pence per kWh can mislead because appliance efficiency, network charges, taxes and equipment costs alter the cost of heating, hot water or transport. ACER reports that electricity remains relatively expensive compared with gas in Europe. If you are considering a heat pump or other electrification, compare the delivered service and equipment costs, not just the retail unit rates.

Decide whether a fixed plan is worth the certainty

Choose a fixed tariff when predictable cash flow is more valuable than the possibility of a lower future rate, your household cannot readily reduce or shift use, or a winter price spike would cause financial harm. Compare the fixed premium with the cost of that risk: a higher standing charge, higher unit rates, exit fee and the date at which the contract ends.

Variable or indexed pricing can make sense when the expected discount is meaningful, you have an emergency buffer for higher bills and the contract explains its adjustment formula. Do not treat the UK price cap as a cap on your annual bill; it limits specified standard-variable rates, while your consumption determines the total.

When dynamic electricity pricing can work

Dynamic pricing is practical only when the meter, supplier system and household equipment support it. First confirm that the offer states the price interval, data requirements, notice of changes, billing method and any maximum or minimum. Then estimate how much load you can actually move.

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Loads that can often be shifted

  • EV charging delayed to cheaper overnight or midday periods.
  • Heat-pump operation moved within a comfortable temperature range.
  • Laundry and dishwashing scheduled for low-price windows.
  • Home-battery charging when prices are low, subject to efficiency losses and battery limits.

The European Commission gives a practical combination: a household might use a fixed-term, fixed-price electricity contract for predictable core needs while using a dynamic contract for a heat pump or EV charging when electricity is cheapest. Only 7% of EU households were on dynamic contracts in 2025; ACER estimated that shifting consumption to cheaper periods could save an average 20%, about €120, on electricity bills. That is an EU average estimate, not a promise for an individual home, and it assumes the household can shift enough use.

Do not assume dual fuel is cheapest

A dual-fuel label is a billing arrangement or marketing bundle, not proof of the lowest combined annual cost. Calculate gas and electricity as if they were separate products, then compare the combined total with the dual-fuel price. Include any bundle discount, its expiry date, and the cost of leaving one fuel while retaining the other.

Check whether the supplier uses one contract, two linked contracts or separate renewal dates. Confirm how a missed payment, meter change or move affects both fuels. A single account can be convenient, but convenience has no monetary value unless the combined calculation shows it.

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Payment method, meters and eligibility can change the result

Request prices for the payment method you will actually use. Direct debit, credit and prepayment can have different rates or charges. A direct-debit estimate may also build up a credit balance; compare the annual price, not the size of the monthly collection.

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Read every eligibility condition. A smart meter, time-of-use meter, prepayment meter, EV, heat pump, solar installation or battery may be required for a particular offer. Confirm that the meter can send the required readings and that installation or replacement has no charge. Smart-meter data enables near-real-time communication and data-driven services, but an energy monitor only shows consumption; it does not change your tariff or guarantee savings. Compatibility, installation and data access vary by supplier and territory.

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Use a repeatable switching checklist

  1. Record 12 months of gas and electricity kWh, seasonal use, meter type and payment method.
  2. Collect each offer’s unit rates, standing charges, term, renewal rule, exit fee, discounts, taxes and permitted change formula.
  3. Calculate annual gas, annual electricity and combined costs separately.
  4. Run mild, typical and cold-weather usage cases, plus price-increase and price-decrease sensitivities.
  5. Check requirements for smart meters, time-of-use metering, EVs, heat pumps, solar or storage.
  6. Check supplier reliability, complaint routes, vulnerable-customer protections and switching terms with your local regulator.
  7. Use a government or accredited comparison service where one exists, entering your location and actual kWh.
  8. Recheck live prices immediately before signing; offers and regulated caps can change.
  9. Save the offer’s terms, quoted rates, calculation and contract end date so you can verify the first bill.

Country and consumer-protection limits

Tariff names, price caps, taxes, switching timelines, supplier protections and comparison services differ by country and utility territory. Ofgem’s cap and guidance apply to Great Britain, not automatically to every UK or European market. CRE’s indexed-price examples describe France. EU figures from ACER describe European averages, not a quote for a particular household.

Before signing, identify the energy regulator or consumer authority for your location and use its approved contact point or comparison tool. Ask the supplier how prices change, how much notice you receive, what happens at renewal and which protections apply if you are vulnerable or have payment difficulty.

Benchmarks that help, but cannot choose your plan

UK Department for Energy Security and Net Zero data reported that 38% of standard-electricity households and 40% of gas households were on fixed tariffs at the end of December 2025. Under that report’s consumption assumptions, the average 2025 combined annual bill was £1,819 on fixed tariffs versus £1,952 on variable tariffs, a £133 difference. Those are UK averages for the stated year and assumptions, not a forecast for your home.

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ACER reported average 2025 EU household expenditure of €840 on electricity and €1,170 on gas. Household electricity expenditure represented 1.2% to 3.9% of national median income across EU countries. Both figures vary by country, consumption and tariff, so use them only as context while doing your own kWh calculation.

Common comparison mistakes

  • Using the supplier’s monthly estimate: replace it with annual kWh and the full rate schedule.
  • Comparing unit rates alone: add 365 days of standing charges, taxes, fees and discounts.
  • Mixing gas and electricity into one rate: calculate each fuel first, then add them.
  • Ignoring payment method: obtain the price for direct debit, credit or prepayment as applicable.
  • Assuming the cap fixes the bill: the cap limits certain rates, not your consumption.
  • Calling a dual-fuel bundle a saving: test the two fuels against separate offers.
  • Choosing dynamic pricing without flexible demand: estimate the kWh you can move before relying on a projected saving.
  • Forgetting the contract end: include the post-fixed-term tariff and renewal rule in your decision.
  • Relying on an old bill after a lifestyle change: model new occupancy, heating, EV or appliance use separately.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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