How to understand your energy bills

Last updated: 16 October 2020

In this guide you’ll get answers to the following questions:

  • Why is it important to understand my energy bill?

  • What does my bill show?

  • How are energy prices calculated?

  • How can I pay my gas and electric bill?

  • Why have I received duplicate bills? 

Why is it important to understand my energy bill?

According to a YouGov poll conducted for Uswitch, 60% of us find energy bills difficult to understand. Take a glance at one and it’s easy to see why – they’re stuffed with complicated jargon and figures. Understanding energy bills is important, however, because it gives you vital information about your own usage.

Your electric and gas bills show more than simply the amount you must pay. They also give you information about your current plan and show you just how much energy you’ve been using across the billing period. Understanding energy bills allows you to verify that you’re billed the correct amount and haven’t built up any debts. Your bill also shows if the energy supplier owes you money, and even if there’s a cheaper tariff you could move to. If your energy use has risen significantly, you can examine your household habits to find out why, leading to greater efficiency – and lower bills.

What does my gas and/or electricity bill show?

You may receive a gas bill, electricity bill, or dual fuel utility bill. Energy bills are broken down into those demanding payment (standard bills), or statements showing what you’ve already paid (direct debit or pay-as-you-go plans). Bills might be sent out quarterly, monthly, or even annually according to your preferences. The billing period and date usually appear at the top of the bill. This is where you’ll also find the basic facts, such as your name, address, and customer reference number. Look for contact information for the supplier at the top as well in case you need to get in touch. 

The bottom of your statement shows what is owed, both before and after VAT. You will see a balance on last statement, which indicates the balance carried over from the most recent bill. Payments received will show any payments you’ve made, and the previous account balance will read as £0.00 if you’ve paid off everything owed from the last billing period. 

Look for a breakdown of your energy prices and usage across the billing period, as well as information about your specific tariff. This will show the name of your current tariff, how you pay for fuel, and the date your agreement ends. Along with this, you’ll see meter readings, the price per unit you pay for your gas and electricity, standing charges, and VAT. This is how your cost is broken down.  

Can you explain all that jargon?

The following glossary of terms should help you demystify your energy bill to understand better what it’s showing you:

TermMeaning
Cubic feet/metreThis unit of measurement is found on gas meters and records the volume of gas you’ve used in cubic feet or cubic metres. One cubic metre is equivalent to 35 cubic feet.
Calorific ValueThe calorific value (CV) is used to describe the amount of heat generated when a volume of gas is burned away. This can vary by region and will be displayed on your gas bill. This measures how efficiently your gas is used.
Economy 7/ Economy 10 These refer to a type of electricity tariff that uses different energy prices for day and night consumption. Electricity used during the night period will cost less than electricity used in the daytime. For an Economy 7 plan, this will cover a 7-hour period, while an Economy 10 tariff will cover 10 hours.
Estimated readings Your energy bill is based on the amount of gas and electricity your household uses. Next to the meter reading section, you’ll see if these readings are estimated (E), or actual (A). Estimated figures are based either on your previous consumption or the national averages. Actual readings are based on the most recent meter readings you’ve submitted.
IGT charges IGT stands for Independent Gas Transporter, which is a type of network separate to the National Grid. Some small suppliers charge extra for supplying this type of home.
kWh A kilowatt-hour (kWh) is simply a unit of measurement. It’s equivalent to the amount of energy used when you run a 1,000-watt appliance for one hour.
MPAN The meter point administration number (MPAN) is also sometimes called your "S" or supply number. You’ll find it on your electric meter at home.
MPRN The meter point reference number (MPRN) is the number assigned to your property’s gas meter.
Standing charges When you look at a breakdown of your bills, you’ll see standing charges referenced. All plans must include a standing charge according to Ofgem regulations. This is a fixed amount covering the costs of network connection and distribution. Some suppliers charge £0.00 to get around this requirement.
VAT The standard VAT rate is currently capped at 5%. All energy bills will show unit prices before VAT, so it’s important to include this in your final price if it’s not already factored in.

How do I convert gas units to kWh?

The reading you get from your gas meter is given in cubic metres (m3) or cubic feet (ft3) – you can see which one it is by examining your gas meter. Metric (cubic metres) meters display the part-unit figure as units highlighted in red to the right of the decimal point; imperial (cubic feet) meters usually display part-units as a dial. Follow this procedure to convert your gas meter reading to kWh:

  1. Subtract your previous reading from your current meter reading to get the number of units used during the billing period.

  2. If the figure is in cubic feet, multiply this by 0.0283 to convert it from cubic feet to cubic metres.

  3. Multiply your units (in cubic metres) by the ‘calorific value’ quoted for your property, which should be somewhere between 38 and 41 MJ/m3.

  4. Multiply the new figure by 1.02264 to account for gas temperature and pressure.

  5. Finally, divide this amount by 3.6 to arrive at the kWh figure.

How are energy prices calculated?

Energy bills are broken down into two main types of charges: the cost of actual gas and electricity consumed (in kWh units) as well as the standing charges. Your bill will show an amount due figure – that’s based on the amount of energy you’ve used during the billing period. Submit regular meter readings to ensure this information is accurate – relying on estimated readings could lead you to paying more or less than what you owe, which could lead to repercussions further down the line if you fall heavily into debt.

Cost per unit

The electricity unit price is one major component of your bill. This wholesale price of energy is the largest simple component, comprising 38% of your electric bill. Wholesale energy prices will fluctuate according to global supply and consumer demand. Your energy supplier’s source will also determine the cost per unit, whether it’s an electricity generator, exchange, or gas producer. With fixed price gas and electric tariffs, you’ll be locked into a set electricity unit price for the duration of your agreement. 

Standing charges

The other component of your energy bill is standing charges. These cover the cost of delivering gas and electricity to your home, as well as maintaining the pipes and wires that make up the national network. Standing charges also include the costs of energy-saving programmes, including government initiatives like the Feed-in Tariff scheme, Community Energy Saving Programme, and Carbon Emissions Reductions Target. All other administrative, sales and marketing costs are absorbed by these standing charges and factored into your final bill.

How can I pay my electric and gas bill?

The part of an energy bill that most of us look at first is the amount due. You’ll see your balance displayed at the bottom of the bill, which includes payments already received. You’ll have a variety of payment options. If you have a prepayment meter, you’ll have already paid in advance for gas and electricity, topping up your account with a smartcard, token, or key fob. 

Standing orders and Direct Debit are the preferred payment method for most energy suppliers. In many cases, you’ll get a discount for paying by Direct Debit. These types of payments are arranged through your bank, with a set amount paid each month to the utility company depending on your gas and electric tariffs.

Online electricity bill payments are usually permitted too – you’ll need your debit or credit card to pay this way. You’ll either log into your own account to pay the bill, or follow a ‘guest’ procedure, which will need you to provide additional information, such as your account number, to ensure you pay the correct bill (i.e., yours).

Most energy bills will also include a giro bank slip at the bottom, showing the amount owed. If you prefer to pay the old-fashioned way, you can submit this back to the energy supplier along with your cheque or cash payment

Why do I have a duplicate bill?

It’s not uncommon to receive a second bill within days of receiving your first. This might happen because your supplier has made an error – for example, incorrect fees, a mix-up of tariff details or incorrect direct debits being taken. Sometimes meter readings get lost as well, which means they’re not applied to your account. Many of these mistakes go unnoticed, which is why it’s so important to read your energy bills carefully each month.

The other reason why you might receive a duplicate bill is if you’re using estimated billing. When there’s a discrepancy between the amount used and what’s been estimated, you could end up owing the supplier more (or less) money to cover this gap. To avoid unexpected bills like this, submit regular meter readings. This will prevent duplicate bills from being sent out, and you’ll be better able to keep track of your outgoings. 

Can I choose paperless billing?

Is your filing cabinet overflowing with utility bills? Most suppliers now offer paperless billing. Many even offer a discount for managing bills online rather than receiving paper bills through the post. There are plenty of benefits to paperless billing. Managing your account online means you can sign in to see your electricity and gas usage whenever you like. You can submit meter readings, find past bills to track your energy use over time, and take control of payments. 

However, the downside to paperless billing is that many people don’t bother signing in to manage their accounts. If you need a gentle reminder to pay your bills, the traditional letterbox route remains the way to go.

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Updated on Tue 28 Jan 2020 08.16 GMT

Published on Thu 31 Oct 2019 11.14 GMT