Understanding Energy Bills

Energy bills and the way they are presented have been such a source of frustration for customers that energy providers have been forced by their regulator to make bills clearer and easier to understand.

They do contain a lot of information not found on other bills and while this means there are lots of calculations, terminology and charges that we sometimes don’t understand, your gas and electricity charges aren’t that hard to grasp once you beat the jargon. To support this, Ofgem (the UK energy regulator) has been introducing changes since August 2013 to make it easier to understand energy bills, and help you make the best decisions when it comes to comparing gas and electric prices and saving money on your bills.

This guide helps you understand your energy bills to make sure you’re not overpaying and can find and stay on the cheapest deals, as well as understand energy bill jargon. Remember to check out our guide to comparing gas and electricity prices to make sure you’re getting a good deal from your energy suppliers.

Ofgem rules make it easier to identify your best tariff

There has been significant progress made to introduce standards of conduct that your gas and electricity suppliers must conform to if they want to avoid serious fines. Do you ever feel as though your bills were unfair, opaque and full of confusing or conflicting information? That’s currently changing, and you should now find the layout of your bills easier to understand. Even if you only receive a yearly energy statement, these changes have made it easier to understand your bill as a whole, and to find out whether you’re on the best energy tariff for your usage. Two key things you should know about these changes include:

Maximum tariff limit imposed

To make it easier for consumers to conduct a gas and electricity comparison, Ofgem have now imposed a limit of 4 tariffs for gas and 4 tariffs for energy by each supplier. That means that your supplier should only have 3 other options for you to choose from at any time, and makes it easier to see whether you’d benefit from switching tariff or supplier.

Best tariff information

In addition to the above change, suppliers must now tell you if there is a cheaper tariff available from them, and your estimated savings if you switched to this new tariff. This will be found on your bill, usually on the first page, and can include a “personal projection” for your next 12 months of energy usage. Remember, there may be early exit fees if you’re on a fixed term tariff, so weigh up the savings to ensure it’s worth your while switching energy supplier or tariff.

For more information on the Ofgem changes, including a breakdown of where your energy bill is spent, please visit their website. While these changes have gone a long way to simplifying the language of your energy bill and what is included each month, there are still a few necessary terms that many over 50s have said they have difficulty decoding.

Explaining energy bill jargon

A lot of the terminology used on energy bills can be off-putting and while, as we mentioned above, Ofgem have been working hard to increase consumers’ understanding of their bills, there are a few terms which still manage to trip up even the savviest of energy customers. GrownUpMoney has selected some of the most commonly queried terms and demystified them below:

Estimated (E) and Actual (A) Readings If you’ve just moved home or your supplier has no knowledge of your energy usage your bill will be an “estimated” bill, based on the national average consumption. Where possible, you should always submit a meter reading to avoid this, as you could end up over or under-paying your usage. Most suppliers allow you to do this online or by telephone. Try to do this as often as possible (monthly is best) and your bill will become an “actual” bill based on your accurate usage.

Debit or Credit Balance Similar to your bank statement, your energy is displayed as being either in credit or debit. When you’re in debit, it means you’ve either received your bill before your direct debit date (and thus are going to pay off the amount noted) or you may be underpaying on your energy costs. If you’re heavily in debit, consider moving to a higher payment or switch to monthly from quarterly payments to avoid “bill shock.” If you’re significantly in credit, consider switching to cheaper payments or claim your money back, especially if this continues through the winter period.

Dual Fuel The term used to describe receiving your gas and electricity from the same supplier. This can also be listed on your bill as a discount, because many suppliers offer cheaper dual-fuel tariffs.

Standing Charge This is a daily standing charge for using a supply, that’s at a set price decided by your supplier. This charge covers the cost of your supply to your home and will generally be expressed on your bill as: number of days since the last bill x set charge price – total. So, 32 days x 32.62p= a £10.44 standing charge.

MPAN & MPRN numbers This is the unique identification of your gas and electricity meters. Sometimes called an “S” number for your electricity meter and an “M” number for your gas meter, this will be displayed on your energy bill in a clear place and will be a string of digits preceded by these letters. Make sure you have this number to hand when calling your energy supplier for any reason as they’ll often use it to identify your property.

kWh (units) This is the standard measurement of electricity and is an abbreviation of Kilowatt hours. Using this measurement, your supplier will bill you by this via prices set per kWh of energy you use. Generally, it refers to usage of 1,000 watts of electricity for 1 hour and is expressed on your bill as kWh x set price.

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