Understanding Energy

There is more to your gas and electricity bill than just your usage. The price you pay includes factors such as VAT, standing charges, maintenance, and wholesale prices.

• Your usage will be calculated through the agreed price on your tariff, this is the cost per kilowatt hour (kWh) of gas or electricity you use.
• Wholesale prices are the cost the supplier buys the energy for, this can go up and down which is one of the reasons your bill can alter when you still have the same usage.
• The standing charge amount is set by your supplier and is charged per day, every day. This helps suppliers cover maintenance costs and supports schemes such as the ‘warm home discount’. (Check with your supplier to see if you are eligible.)

There are a number of ways your energy usage can be assessed and for you to pay your energy bills. The main methods are outlined below.

Smart meter: These are the new, efficient way of keeping track of your usage and ensuring your bills are accurate. Smart meters can be installed in your home which will send automatic readings to your supplier, and they will also provide you an in-home display screen, so you are able to view and manage your usage. For example, this can help you understand which appliances in your home are using the most electricity.

Pre-payments meters: These are installed into your property and require you to top them up with money to access your gas and electricity supply. Usually, you can top up at a local shop with the card you have been provided, or on a dedicated app. You will still pay a ‘standing charge’ on a pre-payment meter.

Billed customers: Bills can be issued monthly or quarterly and require you to pay for the usage of the month/quarter. This is either calculated on estimates for your household or the readings you provide. It is best to provide frequent readings as this makes your bill more accurate, and sometimes less expensive.

Gas and electric suppliers use the priority services register in a number of ways to support those classed as vulnerable, such as:

• Wherever possible, suppliers will provide advanced notice of scheduled maintenance and interruption to supply, so you are able to prepare.
• Suppliers will provide you with priority support in an emergency situation, such as a power cut or gas leak.
• Suppliers will help you provide regular meter readings, so your bill is more accurate.

You may be eligible to join the priority services register if you have a disability, are of pension age or have children under the age of 5 in your household, as well as other qualifying criteria. Check with your supplier to see if you are eligible for the priority services register.

You can also register temporarily if you have been injured or need support after a stay in hospital. The full criteria for the priority services register can be found here.

The term ‘energy price cap’ can be misleading. The cap is implemented onto supplier’s unit prices rather than household bill prices, creating a maximum price they are able to charge for energy per unit.

You may have seen information in the news such as the ‘energy price cap is set at £… a year’, this appears to read that as a household you will not pay more than that amount a year. However, this actually means due to the supplier unit price cap the average household will not pay more than this amount, but if your usage is higher than the average household, you may still pay more than this amount.

You can contact your supplier if you are struggling with the cost of energy or energy debt to arrange an affordable payment plan.

• Ofgem
• Money Saving Expert
• Energy Saving Trust
• Cash Wise' Money Saving Advice
• Energy Cost Calculator- use this tool to compare the running cost of each household appliance