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Understanding your Energy Bill

Understanding your Energy Bill

Understanding your energy bill

According to research, 75% of people find energy bills difficult to understand, and only four in ten people can actually understand how their bill is calculated. Taking the time to understand your bill might seem tedious, but it's important to make sure that you're signed up to an energy supplier who you can trust to give you accurate information on your energy usage and offer you the best tariff possible for your individual energy needs.

Understanding the jargon

Customer Number – this is the reference for your specific account and is the easiest way to identify who you are when you contact your energy supplier. This number should be displayed clearly on your bill.

Calorific Value

The "CV" measures how much energy which is produced when fuel is used, so that the energy supplier can charge based on quality of gas that you are using.

Dual fuel

All this means is that your gas and electricity are supplied from the same energy company. You often receive a discount for doing this.

Economy 7

This is a type of electricity tariff where you pay a different amount of money for the electricity that you use in the day compared to the electricity that you use in the night.

Estimated or actual readings

Some suppliers may give you an estimated reading, which might be based on your previous consumption figure, or that of the average national usage if you're new to the supplier. If you give your supplier a meter reading, or they have taken one, then this is an actual reading.

Loyalty points

Some suppliers will offer loyalty points for choosing them to be your energy supplier and are sometimes in the form of supermarket loyalty scheme points. The number of points that you have earned should be printed on your bill.

Meter point administration number (MPAN)

This number is how you can refer to your electricity meter at your property, and should be displayed clearly on your bill.

Standing charges

This is a fixed charge which you pay to access an energy supply. Energy usage costs are then charged on top of this figure. It's useful that this number is separate on your bill so that you can clearly see how much you pay for the fuel you use.

Transmission Costs

This is a charge added to your electrical bill to cover the costs of running the National Grid.

Distribution Charges

This charge is based on the costs of the equipment used to deliver energy from the transmission system to the customer. This includes the operating and maintenance expenses of the distribution plant and other equipment such as local wires.

What your bill includes

There are new regulations imposed on energy firms by the energy regulator, Ofgem, who have made it obligatory for suppliers to include the following details on your energy bill:

  • Bills now have to include a tariff comparison rate, so that you can compare costs across the market, much like the APR on credit cards and loans. This ensures that you can switch to a different price plan or even change to a different supplier, as this should make it easier to compare costs across the market.
  • Some energy companies will charge you for an estimated bill cost, rather than your accurate usage and details of any charges should be clearly outlined on your bill. To avoid these charges, simply contact your supplier to give them a more accurate meter reading so that you only pay for what you're actually using, then ask them to send you a new bill.
  • As well as covering different suppliers who might be offering cheaper rates, energy bills are now also required to inform you if suppliers are offering a cheaper tariff and must include any potential savings you could be making.
  • Your energy bill must always include how much gas or electricity you have used in kilowatt hours (kWh). If the supplier sent someone to take your meter reading, an 'A' should be displayed on the bill to show that the reader was actual, an 'E' if the reading was estimated, or a 'C' if you supplied the meter reading.
  • The bill should always include an emergency contact, and advice on what to do in an emergency situation. Some suppliers also offer advice on energy consumption, and how to reduce your bill.

It's important to note that even if you pay by direct debit, you should still receive a quarterly bill. You can also ask the supplier how the quarterly figure was calculated, and challenge the price if you don't think it is accurate.

How bills are calculated

There are two major factors which influence how your bills are calculated: the electricity and gas readings you regularly provide to your energy supplier, and the meter readings taken by the energy companies themselves. These factors will influence how accurate your energy bill is rather than it just being estimated. The amount you pay will consist of a range of elements, such as wholesale energy and supply costs, distribution charges, transmission charges, VAT, environmental charges, and other costs.

Sources:

Understanding your gas and electricity bills

Energy bills explained

Understanding energy bills

Understand my Energy Bill