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Understanding your energy bill

By Nicole Wilson

We know you've got better things to do than stare lovingly at your energy bills. But it's important that you're comfortable with the key terms and charges on your statement.

Illustration of someone looking up terms on their energy statement with a dictionary

What am I paying for?

Your energy bill is made up of three main charges:

  • The energy you've used, which is measured in kilowatt hours (kWh)

  • A standing charge, which covers the costs of keeping you connected to the energy network

  • VAT, a government tax which is charged at 5%

Occasionally, you'll see other items listed on your bill, which should be clearly labelled. This might include things like late payment fees, meter installation charges or any credit you've earned by referring a friend to your supplier. For now, we'll focus on the most common terms you'll see on your bill.

Energy costs

No surprises here, the largest cost on your energy statement will be for the gas and electricity you've used.

Your energy usage is based on your meter readings. This is measured in kWh (kilowatt hours) which counts as a 'unit' of energy. Your supplier may use an estimate if they haven't received a meter reading from you, so it's important to send regular readings.

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If you have a smart meter, your readings will be automatically sent to your supplier. That's one of the perks.

The amount you're charged for energy each month is worked out by multiplying your energy use in kWh (kilowatt-hours) by your unit rate. The unit rate you're charged depends on your tariff.

The two most popular kinds of tariff are 'fixed' and 'variable'. There are pros and cons to each. We'll do a whistle-stop tour of tariff types here, but you can read our guide to tariffs for more information.

Fixed

A fixed-term tariff means that your unit price for gas and electricity will stay the same for the length of your contract. This can be helpful for budgeting and it offers a bit of security against price changes in the energy market. Most suppliers will roll you onto a more expensive tariff once your contract is up, though, so you'll need to shop around again before this happens. If you decide to switch suppliers in the middle of a fixed-term deal, you'll likely need to pay an exit fee, too.

Variable

A variable rate tariff means that the price you pay for gas and electricity reflects the real cost of wholesale energy. This can go up or down. Variable rates can offer more flexibility because you won't get tied into a contract with your supplier. If you're a Bulb member, you're on a variable tariff. This means you're always on our best rate and you'll never pay an exit fee if you decide to leave.

Standing charges

A standing charge is a daily fee for keeping your property connected to the energy network. It's a bit like paying for line rental on your home phone (remember those?)

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You'll pay a fixed price per day, no matter how much gas or electricity you use. That means you'll have to pay a standing charge even when you're not actively using energy, like when you go on holiday.

Standing charges vary by region and supplier, and will be laid out as part of your tariff. It's an important thing to look at when you're comparing energy prices.

To see your standing charge with Bulb, enter your postcode under 'Find tariff details for your area' on our tariff page.

Key terms: your balance

  • 'In credit' means you have money in your energy account

  • 'In debit' means you owe your supplier money

Some suppliers charge you for your energy 'in arrears'. That means you'll get the bill for the energy you've used at the end of the month. Your account may never be in credit because your supplier will take the exact amount owed to them each month. Bulb works a little differently.

Your balance with Bulb

Illustration of some coins with earmuffs on
Bulb takes payments for energy one month in advance to keep costs down for our members. Your payments stay the same throughout the year, and we deduct the cost of your energy usage each month. This means you'll build up credit over the summer and use it during the winter, when your energy usage goes up.

Your statement will show your most recent payment as well as your account balance once the cost of energy has been taken out. If your balance is looking low, you can change your payment amount in the 'Payment details' section of your Bulb account. If it's looking very high, you can get a refund for the credit in your account.

Your annual energy usage

Whoever your supplier is, your statement will include an estimated annual usage in kWh for gas and electricity. This is a useful number to know when you're shopping around because it gives a clear picture of your energy consumption over a year. You can use this figure to make energy quotes that have been based on your address more accurate. Depending on your supplier, your estimated annual usage might be labelled 'Estimated Annual Consumption' (EAC) for electricity or 'Estimated Annual Quantity' (EAQ) for gas.

What's a personal projection?

Illustration of an overhead projector with a pound sign
Your supplier will also provide a 'personal projection' which predicts how much you'll spend on gas and electricity over the next 12 months. This includes standing charges and VAT.

Your personal projection can be useful when you're comparing quotes from lots of different suppliers in pounds and pence. It's also used by your supplier to figure out whether they could offer you a cheaper tariff. If that's the case, it'll be highlighted on your statement.

If you're on a fixed term contract, your personal projection figure assumes that you'll do nothing when your contract ends. In that case, your supplier will put you on an (often more expensive) standard variable tariff automatically.

Say you had 3 months left on your contract, your personal projection will include your energy costs, standing charges and VAT for:

  • 3 months of usage at your current 'fixed' rate

  • 9 months of usage on your supplier's standard variable tariff

That means your personal projection will change month to month, depending on how much time is left on your contract.

How do you work out my gas usage in kWh?

Your energy bill should explain the steps taken to get from your meter reading to your usage in kWh. On a Bulb statement, we have a table that looks a little something like this (imperial on the left, metric on the right):

gas usage tables example

Meter units used

This line shows the number of units measured by your meter during the billing period. Depending on when your gas meter was installed, it'll measure your usage in cubic feet (ft3) or cubic metres (m3).

If this shows a negative value, it's usually because you've submitted a meter reading that's lower than an estimate used on a previous bill. Not to worry, you'll only pay for the gas you've actually used.

Volume conversion factor and metric units

These 2 lines convert your meter measurements in cubic feet to cubic metres. If your meter units are already metric, your running total will be the same as line 1.

Volume correction

This adjusts the volume of gas to account for the temperature and pressure at your property. This figure is the same for all households, so it'll say 1.02264, no matter who your supplier is.

Calorific value

This is essentially a measure of how potent the gas supplied to your home is, or the 'available heat energy'. This varies from day to day and region to region. Again, your supplier will source this figure from energy industry data.

Convert to kWh

Finally, your supplier converts your usage into kWh to give you a clear picture of how much gas you've used. Phew.

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