Understanding your energy bill and using it to pay less for gas and electricity

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If you’ve ever looked at your energy bill and felt none the wiser about what you’re actually paying for and whether you’re getting a good deal, you’re not alone. Surveys show that many of us don’t understand our bills. How could yours help you to get a cheaper energy deal.

Understanding your energy bill

You should get a bill from your energy supplier every three months, but if you’ve signed up to an online deal, you’ll normally get a statement every month. You may be emailed a statement, or you’ll be emailed a reminder to tell you that you can log in and view your statement. If you have an online account, you can log on and check your account in between.

What your energy bill should tell you

Energy companies don’t make things easy for their customers (in my experience!), so your bill may look different, depending on who your energy supplier is. However, all energy bills should have the same basic information:

1. Bill date and bill period: The bill will tell you the date it was generated and the period it covers. This is useful to know if you’ve recently submitted an accurate meter reading as you can find out whether or not the bill period includes the meter reading.

2. What you owe: your bill will tell you how much you pay by direct debit and whether your account is in credit or debit or what you are due to pay if you don’t pay by direct debit.

3. When you pay: your bill will tell you when your direct debit payment is due to leave your account or when you are due to make your payment.

4. What your energy costs: You will be told how much you pay for your gas and electricity. This will include a breakdown of the rate you pay as XX pence per kilowatt hour. It also tells you how much you pay as a standing charge (if you pay one) and how much VAT you pay.

5. Your tariff: you will be given details about the tariff you are on, including any end date, if appropriate and exit charges if it’s a fixed tariff deal.

6. Are you on the cheapest tariff? Your energy supplier must tell you whether you are on the cheapest tariff they offer for your payment type. That means it may not be the cheapest tariff for you overall and it won’t tell you whether or not you could save money by switching to another company altogether.

7. Your estimated energy use: Your energy supplier will tell you how much it estimates you’ve used in the ‘bill period’.

8. Latest meter reading: Your energy bill should include the most recent meter readings.

9. Tariff comparison rate: this tells you, in a standardised format, how much you pay for each kWh (kilowatt hour) of energy . It’s not based on your actual energy comparison but not the amount of energy an ‘average’ household uses. The idea is that you can use this rate to compare energy prices with other providers, but as it’s based on an ‘average’ use and not yours, it may not be the rate you pay.

SAVVY TIP: It’s a bit like an APR on a credit card or loan, in that it standardises the information, but it doesn’t necessarily mean it’s accurate!

10. Customer number and meter number: Check your meter reference number with that on the front of your meter(s), especially if you’ve been getting bills that are higher than you think they should be. Meter numbers are wrong from time to time, or sometimes energy companies think the meter is an old-style one or they may think that the meter charges energy use at different rates in the day compared to night when it doesn’t (or vice versa).

Annual energy statements

As well as regular bills, you’ll be sent an annual statement which will tell you how much energy you’ve used over the last year. It also tells you the estimated cost for the coming year if you stayed on the same tariff and which tariff you’re on. Your annual energy statement will also tell you:

Any discounts or premiums you pay. This could be a direct debit discount or additional costs — for example, if you pay your bill quarterly by cash or cheque, your statement will tell you how much you could save by paying by direct debit.

Information on how to switch supplier. Your annual statement reminds you that you’re able to switch to a different supplier and signpost you to sources of information.

Switching energy supplier

The annual statements and bills will help you compare the tariff you’re on and your energy supplier’s current cheapest deal. But you might decide you’d prefer to switch to a different supplier altogether.

SAVVY TIP: The fact that you’ll have information about how much energy you’ve used in the last year together with your annual bill will make it far easier to switch supplier. But you must be careful when you shop around.

Compare the comparison sites. Different price comparison sites sometimes come up with different results for the cheapest deal and because tariffs are so complicated (and companies bring out new deals all the time) a better rate may be just around the corner.

SAVVY TIP: Always shop around at several price comparison sites. There are dozens of them to choose from and Ofgem has a list of price comparison sites accredited to its confidence code.

Where to complain if you have a problem

If you’re not happy with your energy supplier or you have a problem over billing or switching to a new supplier, there are several organisations that can help.

Citizens Advice consumer service. This is who you should contact in the first instance. It can give you advice on how to deal with your complaint or refer your complaint if it thinks it’s serious.

The Energy Ombudsman. If you have complained to the energy provider and you’re not happy with their response, you can take your complaint to the energy ombudsman.

SAVVY TIP: You have to give the gas or electricity company up to eight weeks to deal with your complaint unless they give you a ‘final response’ letter sooner. Once you’ve received that you have nine months in which to complain to the energy ombudsman.

Useful links:

Citizens Advice website has a useful tool that will let you see what information your energy company’s bills provide.

Related articles: 

Can you switch supplier if you’re on a prepayment gas or electricity meter?

The back billing code; if you don’t get an energy bill, do you still have to pay?

If you want to ditch the big six energy companies – what’s on offer?

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