The easy way to understand your energy bills

There’s a lot of information on your energy bills, but what does it all mean? Here’s everything you need to know to understand your gas and electricity bill.

Disclaimer: The information on this page was last updated on 23/12/2022, 13:30:22

We all receive regular energy bills, but how much of yours do you understand? We want to make gas and electricity simple and understandable for everyone – starting with your bills. As always, we’ve got you covered!

What to look out for on your energy bills

With the rise of paperless billing, people are becoming less likely to read their bills every month, but it’s important that you keep an eye on them so you can understand when something goes wrong.

There’s so much information available on your energy bill, it can be hard to know where to start. However, there are three main things to look out for:

  • That you’re being billed for the right amount
  • That you’re not building up any debt
  • If there’s a cheaper tariff you could be on

What you can find on your electricity and gas bill

Whether you receive a separate gas and electricity bill or both in one, they’ll all have at least some of the same information.

Energy statement, annotated #1
Energy statement, annotated #2

All regular energy bills should contain:

  1. Your balance
  2. Your tariff name
  3. Your payment method
  4. Your tariff end date
  5. Any exit fees you might have to pay
  6. Your estimated usage for the year
  7. Your bill breakdown
  8. Energency phone numbers
  9. Your MPAN and MPRN

It may also include other information, such as:

  • Whether your readings are estimated or accurate
  • If there are any discounts available to you
  • If you could get a better deal on another tariff

Terms on your energy bills that you might not understand

Your energy usage will be measured in kWh (kilowatt-hours). This is how many kilowatts (1,000 watts) you are using per hour. For example, if you are using a 1,000-watt washing machine for an hour, this would be 1kWh. The average electricity price per kWh is between 14p and 20p while the average gas price per kWh is between 3p and 5p.

A standing charge is a fixed price you will pay every day on top of your energy usage. Your standing charge for electricity is normally around 20p per day and the average gas standing charge is around 30p per day. This means that if you have both gas and electricity at home, you could be paying 60p per day, even if you don’t use any energy.

Even ‘debit’ and ‘credit’ can be confusing on your bill. While we’d typically associate credit as something you owe, in energy, credit is owed to you. You’ll have credit on your energy bill if you’ve paid for more energy than you’ve used. In contrast, debit means that this is money that you owe for your energy if you’ve used more than you’ve paid for.

On your electricity bill, you’ll find an MPAN which is a Meter Point Administration Number. It might also be called a Supply Number or S Number. This allows your electricity supplier to identify your property using your electricity meter.

On your gas bill, you’ll find an MPRN which is a Meter Point Registration Number. It might also be called an M Number. This is similar to an MPAN but it identifies your gas meter rather than your electricity meter.

Why have I been sent an estimated bill?

If you’ve been giving your meter readings regularly and on time, you’ll receive an ‘accurate bill’. This means that your bill is based on your readings and actual usage and you’re only paying for energy you’ve used.

If you haven’t, you’ll receive an estimated bill. Your energy provider will estimate how much energy they think you will have used and charge you for that instead. This means that you’ll likely be paying for more energy than you’ve used.

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If you have a smart meter you shouldn’t receive estimated bills. However, if you do, there might be a problem with your meter. It might have gone into ‘dumb mode’ for some reason, or might have just lost connection with your provider. Either way, it’s worth contacting your provider to find out what the issue is and how it can be resolved.

What to do if you haven’t been sent a bill

If you haven’t been sent a bill recently, the first thing you should do is check your online account. Most providers will keep old and current bills on your online account for you to go back and view, even if you’ve opted for paper billing. If you have this period’s bill on your account, it may be a problem with your address or just the postal service.

If there’s no bill on there either, you should contact your energy provider. Contacting them as soon as possible makes sure you avoid a hefty bill when the mistake comes to light.

If you pay by direct debit, your bill should already be paid for and you won’t have to worry about running into debt. However, if you pay another way, you might end up with an unexpectedly expensive bill when it’s rectified.

Your energy provider can’t back-bill you for over a years’ worth of energy. If they do try to bill you for the energy you used over 12 months ago, you should write them a letter reminding them that Ofgem’s back-billing rules protect you and they should send you a new bill, charging you for just 1 years’ usage.

Where does your money go?

There are a lot of costs behind supplying your home with energy that your bill covers, not just your usage.

  • Wholesale costs – These make up the biggest part of your bill and cover how much providers have paid for the gas and electricity to supply you with energy. Some providers now have smart tariffs that vary the cost per kWh depending on the current wholesale price.
  • Network costs – Suppliers are charged for the maintenance of the wires and pipes which bring the gas and electricity to your home. Ofgem sets price controls on these network costs as there is a monopoly in the networks.
  • Operating costs – These are to cover the everyday costs for your provider to run their business. This is where providers are able to make a profit.
  • Environmental and social obligation – Programmes set by the Government to save energy, reduce emissions also create costs for the providers.
  • VAT – Almost everything we buy has VAT added to it, whether that’s bills, some groceries, or clothes. VAT for the energy sector is set at 5%.

How can I decrease my energy bills?

There are a number of different ways to decrease your energy bills, but the main one is to use less energy. While it’s easier said than done, it only takes a few small, simple steps such as turning off appliances at the wall, switching lights off when you leave the room, and invest in more energy-efficient appliances.

Upgrading to a smart meter can easily make you more energy conscious as you can see your usage in real-time monetary values. Seeing how much each appliance is costing to run could make you think twice before using them so often.

You might even be able to save money switching to a new tariff or provider. While your provider prints on your bill whether there’s a cheaper tariff for you, there could be an even better one elsewhere. For help switching providers, give Utility Switchboard a call on 020 3992 7717.

What to do if you’re struggling to pay your gas or electricity bill

Sometimes, things can come up which might make you struggle to pay your bills. When this happens, you should contact your energy provider and you can work out a way to deal with this. They have to help you come up with a solution.

There are two main ways your provider might suggest. You could set up a payment plan where you pay back your debts in small instalments. These will take into account how much you can afford to pay and how much energy you might use in the future.

If you can’t negotiate a better deal, you might be offered a prepayment meter. With a prepayment meter, you pay for your energy before you use it and is often used to cover debts owed. They’ll take money out of your top-up (leaving you enough for your energy usage) until the debt is repaid.

If you can’t come to an agreement or are worried about your debts, you can get help from Citizen’s Advice by calling 0808 223 1133. They’ll give you practical and impartial advice on how to solve the problem.

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