Your Energy Bills Explained

Most utility companies send quarterly bills – either by email, or in the post, but do you actually read your bill? Are you sure that it’s accurate? Energy bills can be pretty confusing to read, especially at first glance – but it’s worth spending a few minutes working through the bill to make sure that it’s accurate. Doing so will help you save on your energy bills in the future if you catch mistakes early. If you’re under-paying, it’s better to find out now and save yourself  sudden high energy bills a few months down the line. If you’re under-paying, you may be able to get a refund or save yourself a lot of money on your next bill.

 

How Electricity Bills Are Broken Down

energy billsElectricity bills are usually the simpler of the two. Some providers still use a standing charge, while others have done away with that system. If you are on a standard electricity meter, you will be charged at a certain rate for each kW/h of electricity you use.

Some providers charge one amount up to a certain number of kW/h, and there are some older electricity tariffs that charge one amount during the day, and another amount at night. If you are on one of those tariffs, the different amounts will be clearly broken down on your bill.

How Do Companies Decide How Much to Charge?

The vast majority of your energy bill comes from the wholesale energy cost for the energy you used, plus the profit margin of your supplier. The remaining amount (around 30%) goes on distribution, investing in green energy, process controls, the provision of your electricity meter, monitoring software, VAT, and other expenses.

Wholesale electricity costs vary over time, but if there’s a sustained large increase in cost, then the provider will have to pass that on – that’s why price increases tend to come in rounds, with lots of companies changing their prices over the period of a few months.

How Gas Bills Are Broken Down

Gas meters measure the amount of gas used by volume (cubic feet or cubic meters), but the bill usually shows the amount of gas used in kWh. To convert volume to kWh, you need to know the calorific value of the gas. This can vary each quarter, and is determined using monitoring software and process gas chromatographs. As part of the process controls used by the gas pipeline providers, the calorific value of the gas is constantly monitored (along with many other pieces of information, such as pressure, safety details, etc.).

The average calorific value taken over the last quarter is used to calculate your bill.

Estimates

If your energy provider has not managed to read your meter recently, they will estimate your bill. Estimates work well for most people, but if you have just moved home, changed your heating system or some major appliances, or have changed your lifestyle (perhaps you have a longer commute now so are out of the house longer than normal), the estimate may be incorrect.

It’s a good idea to call in your meter readings regularly, and to arrange for an official meter reading if you haven’t had one done in a long time.

Article written by James Harper on behalf of Lee Dickens, experts in process controls and monitoring software. Image by Ellie Goodman.