Your energy bill contains a lot of important information and knowing what it all means could end up saving you money every year. Thanks to Ofgem, all providers are required to print certain information on everyone’s energy bill and Ofgem continues to encourage bills to be simplified for consumers.
This means that on your bill you’ll receive the name of your tariff, how much energy you consumed since your last bill, the conditions of your contract, the energy supplier’s contact details, and, importantly, information on contracts that could save you money.
Understand Your Plan
It’s vital that you understand what type of payment plan you’re on. These range from budget billing plans to monthly usage.
When on a monthly usage plan, you are billed every month based on the number of kilowatt hours you consumed. A monthly budget billing plan will take the average amount of energy you consumed the previous year and charge you the average monthly amount. This means that you pay a steady amount throughout the year, rather than the low-high cycle of summer and winter.
Know how many hours of energy you use
Being aware of how many hours of electricity you use ever month will help you break down the daily cost and how the monthly usage changes across seasons. It’s important to distinguish between daily and monthly rates, and to measure your usage by the same interval that you’re billed on.
Your Energy Use
Your energy bill will display how much gas and electricity you have consumed during this billing cycle. In this section of the bill, you will find the wholesale cost of the energy paid by your supplier, as well as the profit margin the supplier passes on to you.
You will also be provided with the supply costs, which are the other costs associated with supplying energy to your home. For example, standing charges might be applied to your bill. A standing charge will be listed separately from the per-unit cost of energy and is a fixed fee intended to “cover the costs of keeping your home connected to the grid”. You can find domestic energy contracts that offer ‘no standing charge’.
Most consumers will pay 5% VAT on energy. While this is currently capped by the government, it is liable to change according to government policy.
Environmental fees of 6% toward gas and 11% toward electricity. These fees are in place to go assist with “providing more sustainable alternatives to carbon-based energy”. Distribution fees makeup 32% of both gas and electricity costs combined and represents the “cost of getting your energy from the generator to your house”. It helps cover the cost of maintaining the network of wires and pipes that make this possible.
There are estimated (E) and actual (A) meter readings. If you have been given an estimated reading, your energy supplier has calculated how much to charge you based on your past consumption or national average figures if you cannot provide a previous reading.
If you present a meter reading to your provider, or if they send someone to take a reading, you will see the actual amount of energy consumer on your bill.
It’s highly recommended that you take a meter reading yourself every three months. This will ensure that your costs are accurate and you aren’t being charged for the energy you haven’t used. Having a smart meter installed will give you a “break down of how much energy you use and at what times”, which will not only help you track your usage, but it will also make it easier to send the data to your supplier.