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Understanding your energy bills

Most of us don’t bother to study our energy bills.

Who wants to make sense of so much jargon and so many numbers?

But it’s worth taking the time to understand your utility statement.

You can then make sure that the bill is accurate – and that you are signed up to the cheapest tariff.

Industry standards

The energy regulator, Ofgem, has recently imposed new standards on energy firms. It wants all communication with customers to be simple and engaging. Suppliers are also obliged to include certain details on your bill to help you to clarify and compare costs.

Cheaper tariff

The Ofgem changes are good news for consumers. Suppliers must now, for example, inform their customers if they offer a cheaper tariff and outline the potential savings. So, if you are on a standard tariff, but could save by switching to the firm’s online deal, the information will be on your bill.

Comparison rate

Your bill will also include a tariff comparison rate, which is similar to the APR on loans and credit cards. The tariff comparison rate should make it easier to compare costs across the market, not just with your own supplier. Plus, the so-called tariff label must set out the key terms and conditions of the price plan in case you want to switch.

Energy consumption

The amount of gas or electricity you have used is displayed in kilowatt hours (kWh). If you supplied the meter reading from which the bill was calculated, you should see the letter C for customer.

If the company sent someone round to read the meter, the reading will be actual, or A. An estimated reading is represented by the letter E.

Direct Debit

You should still receive a bill if you pay by monthly direct debit. You can also ask the firm to explain how the monthly figure was calculated and negotiate a different monthly payment if you think it is unfair.

However, bear in mind that direct debit customers tend to overpay in summer and underpay in winter.

Emergency contact

Finally, the bill should include details of how to pay, contact information and advice in case of an emergency. Some firms also offer energy saving tips to help reduce consumption and cut down costs.

Bill shock

You might receive a bill that’s unexpectedly high – and it can be a nasty shock. If you doubt the amount, check whether the bill is based on estimated readings. If so, contact the firm with an accurate meter reading and ask for a revised bill.

New appliances

There are other reasons for high bills. Perhaps you have used an unusually large amount of energy over the bill period. You might, for example, have turned up the heating or bought a new appliance that consumes more energy.

End of contract

You might have come to the end of a cheap tariff. People on fixed tariffs often get a bill shock when the fix expires and they are automatically switched to a standard rate.

Your utility firm should, however, give you between 42 and 49 days’ notice of the end of a fixed-term contract.

Any exit fees attaching to a fixed-term contract should not be applied if you decide to switch once you have been given notice of the contract coming to any end.

Incorrect bill

Of course, the energy company could have got its sums wrong. In which case, you need to contact the supplier straight away – and back up your case with accurate meter readings.

Financial struggles

Energy bills are a strain on household budgets and you might find that you are struggling to meet the cost of your gas and electricity. You should contact your supplier immediately if you are in financial difficulty, or your energy supply could be cut off.

The energy supplier is obliged to offer advice and to come up with a weekly, fortnightly monthly or payment plan based on your affordability. If the amount is unrealistic, the firm could be in breach of its licence conditions and you could have grounds for complaint.

Pre-payment meter

If you cannot keep up with the payment plan agreed with the firm, it could install a pre-payment meter. You would then pay off a fixed amount of your arrears, as well as paying for your current usage.

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