Energy Bills Explained

Energy Bills

Energy bills can look a little complicated, but actually they are full of useful information to help you understand your energy usage and exactly what you are paying for. This can be great for keeping check on your energy consumption and ensuring that you are not paying more than you should be for gas and electricity.

Here we break down your energy bill in a simple, clear and easy to understand way so that you know exactly what to look for.

Girl reading energy bills to switch energy supplier.

What’s Included on your Energy Bill?

Personal Details – Including your name and the address of the property that the energy bill relates to.

Tariff Details – This includes the name of your current energy tariff, payment methods, tariff end dates and exit fees.

Energy Usage Details – This shows the number of units (kilowatt hours) that you have used over the billing period. Some UK energy suppliers also display your usage for the same period in the previous year, allowing you to see how your consumption compares.

Charges and Payments – This shows the charges that are due for the billing period and includes the Unit Charge for the the amount of electricity of gas consumed, and also the Standing Charge (daily rate). You will also see the amount of VAT that you have been charged. VAT is typically charged at 5% on domestic energy bills in the UK.

Tariff Comparison Rate (TCR) – It is a requirement for all UK energy suppliers to display a Tariff Comparison Rate (TCR) on energy bills. The Tariff Comparison Rate is presented as a figure in kilowatt hours (kWh) and is designed to allow you to make easy comparisons between one energy tariff and another, similar to the APR when you take out a credit card or a loan. The figure takes into account the price of the energy tariff and any discounts or additional costs on the tariff. Tariff Comparison Rates should be used as a guide only because actual prices will vary depending on your specific energy usage. The TCR is based on the energy consumption of a typical domestic energy consumer (3,200 kWh’s per year for electricity and 13,500 kWh per year for gas).

Advice on how to reduce your energy costs – Some UK energy suppliers also include additional information about steps that you can take to improve energy efficiency at your home, such as the use of insulation.

Understanding the Charges on Your Bill

Lets begin by looking at your charges, as this is the bit most people are initially interested in. The overall amount that you pay for your gas and electricity is the total of two different charges. These are:

Standing Charge (Also known as Daily Rate)

Unit Charge (The amount you pay dependant on the amount of energy you have actually used).

Standing Charge
The standing charge, also know as the ‘daily rate’, is a fixed charge payable per day. The standing charge is quoted in pence per day, and the total standing charge paid on your bill is therefore the daily rate multiplied by the number of days covered by your energy bill. All energy tariffs are required to have a standing charge, but on certain tariffs designed for infrequent energy use, this may be set to ‘0’.

Unit Charge
The unit charge is an amount payable (in pence) per unit of gas or electricity used. Units are measured in kilowatt hours (kWh) for both gas and electricity. On your electricity meter, the display shows the exact number of units (kWh’s) used. On your gas meter, the display shows the amount used in Cubic Meters (M) which is then converted to units used by your energy company.

Below we run through the format that your charges may be displayed on your energy bill. 

* Discounts are applicable on certain tariffs including:

  • Some online energy tariffs are discounted as these are typically cheaper for the energy company to operate.
  • Many UK suppliers pay discounts to dual fuel customers (those using the same energy supplier for both gas and electricity).
  • Most energy providers also provide discounts to customers who choose to pay be direct debit.

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Energy Bills Explained was last modified: November 17th, 2015 by admin

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