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UnderstandingEnergy Bills

With complicated jargon and never-ending numbers, it’s no wonder that many of us can’t make head or tail of our energy bills. But this is a big problem. If you can’t understand your bill, how do you know if you’re being charged the right amount for your electricity and gas usage?

Rather than just hoping for the best every month, why not get clued up on your energy bills? They aren’t as confusing as they look and knowing more about them can help you to considerably cut your energy costs.

Our handy guide deciphers parts of your energy bill that you might find confusing to give you more control and greater understanding of what you are paying.

Understanding your tariff

Energy suppliers can only offer four core tariffs to their customers, the most popular being standard, online, fixed-energy and dual fuel. The tariff you are currently on should be included in your bill, but here's a run-through of some of the most popular ones: 

 

  • Standard tariffs are often energy supplier's default rate. A large percentage of energy customers are put onto this tariff, which generally isn't the best value for money because of its variable market prices.
 
  • Fixed-energy tariffs, as the name suggests, have fixed rates. These are usually set until a defined end date and are often cheaper than standard tariffs.
 
  • Dual fuel energy tariffs provide both electricity and gas from one energy supplier. This can be an extremely convenient plan to be on because you only have one supplier and one payment per month. However, it's not always the cheapest option.
 
  • Online tariffs involve you managing your own account by taking meter readings yourself and by receiving paperless bills such as email attachments. Some energy suppliers will give you a discount for this self-management, which can make them more affordable than other tariffs. 
 
If you're considering switching your tariff, ring up your energy supplier for a chat to see if they can offer you a cheaper plan. 

Monitor your energy consumption

Energy consumption figures are one of the main things that people find confusing when it comes to their energy bills. Energy suppliers measure your gas and electricity consumption in kilowatt hours (kWh) and they can find out how much you've been using by taking readings from the meter in your home. Without accurate readings, it's harder to know whether you're paying the right amount or not.

If your supplier asked you to supply a meter reading for your bill calculation, the letter C for 'customer' should now be listed next to meter reading figures on your bill.
Alternatively, if a technician from your energy supplier came to read your meter for you, the reading on the bill should be listed as A, or 'actual'.

There is such a thing as an estimated reading too, which should be listed as 'estimated' on your bill. However, if this is inaccurate you might get a shock when you receive your bill in the post. If this has happened to you, take an accurate reading from your meter and contact your supplier to revise your bill. 

Decoding the T&Cs

No matter what tariff you are on, energy suppliers should include terms and conditions for your contract on your energy bill. These should clearly outline your tariff end dates, instructions on how to pay your bill and any exit fees you might have to pay.

If you decide to switch to a different energy supplier who offers a cheaper tariff, you should always check these T&Cs before committing to anything. After all you don't want to be faced with surprise fees for leaving too early. Most suppliers will give you at least 42 days' notice that your fixed term contract is coming to an end and this is when the exit fees no longer apply. You are then free to switch and move to the cheaper tariff with another supplier. So it can pay to be patient and wait before making the switch.

However, if you're really eager, switching long before your exit date and paying your exit fees can still be beneficial. But only if the saving on your new tariff is more than the fees you would pay to leave your old one. 

Why do energy bills change?

Energy bills can seemingly change in the blink of an eye. The reason for this is that there are several factors that can influence the price that energy suppliers charge. Firstly, there is the wholesale cost that your supplier has to pay out to gas producers and electricity generators to get you the energy you need. Changes in these energy costs can cause suppliers to raise or cut the prices of their energy bills.

Another thing that can affect price is competition from other energy suppliers. To keep customers, energy suppliers are pressured to reduce their prices often then raise them gradually. This can result in a fluctuation in cost as they each try to win new customers and keep their old ones.

There's also VAT to consider. Generally this is 5% but it can be subject to change, which can influence the price of your energy bills. However, your energy supplier should always notify you beforehand if the VAT price is doing up or down. 

Paying by direct debit

Ah, the million dollar question. You'll get more products and a superior service with business broadband, but that inevitably means forking out considerably more per month.

If you're certain you'll need those extras - web domains, multiple phone lines, email addresses, tighter security - then it's well worth spending more.

If you think you'll be fine on a residential broadband package, though, save your pennies and opt for a standard service instead. Just bear in mind that the savings you make may be cancelled out if you have problems with the connection and then can't get through to customer support quickly enough.

Bring your energy bills down

If you’re eager to bring down your monthly energy bills without having to sit in a cold dark house, you’ll be pleased to know that there are plenty of things you can do. 

If you keep a lot of your electrical devices on standby within your home, they are still using energy that could be adding £30 or more to your energy bill. So just turning off your electronics when they aren’t in use can bring your energy bill down and save you some extra pennies.

 

Your heating typically accounts for half of your energy bill. Thankfully, lowering it is relatively easy. Adding extra insulation to your home will ensure that more heat is kept inside so you won’t need to rely on your heating as much. You can also use timers and zoning to ensure that your rooms are heated to suitable temperature when you are at home and not when you’re out.

 

If you’ve already tried to bring your energy bills down without much success, switching to another energy supplier might be your best option. Why not see if you can get a cheaper tariff deal elsewhere by using our energy comparison tool.