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Understanding your energy bills - how to make sense of it
Published 5 May 2016 by Emily Bancroft
Don’t be confused by the jargon.
You’d think it would be important to understand your energy bill when it comes through the post. After all, you want to know how much you’re paying and that your energy company is charging you fairly.
But when you get the bill, all of the numbers and the jargon can be too confusing. You might not be able to work out how much you owe or even if you could save any money.
Even though Ofcom, the energy regulator, ruled that gas and electricity providers should make bills clearer, they can still seem like a maze if you don’t know what you’re looking for. We’re making sense of the madness and taking you through what everything on your energy bill means.
Energy bills will vary depending on your provider but they’ll all have the basic info about your tariff:
• the name of your current tariff or plan,
• your total annual energy cost,
• an estimate of your energy cost for the next year,
• information on cheaper tariffs, and
• any conditions of your contract, like when it ends and if you’ll pay any exit fees.
You might also see how much you’re paying every month if you’re on Direct Debit. This should also tell you if your payments need to change for any reason – like if you’re not paying enough based on your estimated energy usage.
Your bill might go into more detail about how your energy provider worked out your estimate bill but this will probably include a lot of figures like VAT and the cost of gas. If there’s anything you don’t understand, ring your supplier and they should explain it to you.
Break down the jargon
A lot of the terms you’ll see on your bill can be confusing. For example, if your bills says you’re in credit or debit, do you know what this means? Credit is when you’ve overpaid your energy bill and debit is when you’ve not paid enough. This means your energy supplier might change your Direct Debit or if you’ve got a lot of credit, you could claim it back.
You’ll also see you energy measured in kWh. This stands for kilowatt hour and it’s the unit energy is measured in. For example*, if you used a standard 1.2 kWh washing machine for an hour and your energy costs 15p/kWh, this will cost you 18p.
If your energy bill says you’re on a dual fuel tariff, this just means you pay for your gas and electricity on one bill. This is sometimes cheaper than paying for both separately but not always.
When you’re comparing tariffs and working out if you could get a better deal by switching, look at dual fuel options as well as separate gas and electricity plans. You can do this on a price comparison website – find out how to do this with our guide on switching your energy provider.