How to read your energy bill

Why read your energy bills?

If you're not reading your energy bills, you’re not giving a great deal of thought to how much you're paying or how much energy you're using. This is one of the reasons why so many people miss out on savings gained by switching suppliers.

Luckily, switching providers is fairly straightforward usually thanks to the Energy Switch Guarantee. This has meant a transaction that used to take six weeks or more, can now be completed within 5 working days.

While this is great, it still doesn’t particularly encourage you to read your energy bills. But if you understand how to read your bills, you might feel more inclined to take a look at them – and here's why you should...

Monitor your energy usage

Monitoring how much energy you use and how much it costs can help you cut your bills. It’ll also let you know how much money you’re saving once you make changes to your energy use.

Check you’re being accurately billed

Your energy bill usually shows the energy you’re using. Obviously, this can go up or down depending on changes in circumstances. For example, you may have a family member or friend come to live with you, or perhaps you’ve bought a more energy efficient fridge-freezer.

If there's a sudden increase or decrease but you haven’t changed your usage, get in touch with your supplier.

If you're worried about your energy bill or have queries, your supplier should be able to answer your questions and offer advice.

If you're not satisfied with your supplier’s attempt to resolve the issue, find out more from the energy ombudsman.

Avoid overpaying, or underpaying, on your gas and electricity

By regularly reading your meter and checking it against energy usage on your bill, you’ll avoid being overcharged or undercharged. After all, if you’ve overpaid you’ll have to wait to get your money back. And if you’ve underpaid you’ll get a higher bill later to make up for it.

Stay up to date with changes to your tariff

It’s unlikely your supplier will automatically switch you to a better tariff if one becomes available. Regularly comparing tariffs between suppliers is the best way to save yourself money.

Check if you could save by switching

Energy prices change regularly and new tariffs are constantly being introduced. Keep up to date with the best deals by using an energy price comparison tool.

To get an accurate quote, it’s essential to know your current energy usage – which you will if you've checked your latest energy bill.

What information is shown on your energy bills?

Ofgem states that energy suppliers have to make their bills simple and engaging. Different suppliers arrange their bills in different ways. National Energy Action has a handy tool to take you through the layout of a typical energy bill.

While the amount of information varies, bills typically include:

The name of your plan or tariff – this is useful if you’re looking to switch and need to compare energy quotes accurately.

Details of cheaper tariffs – your supplier will tell you about their cheapest deals.

Tariff comparison rate (TCR) – this will show you how much you’re paying per kilowatt hour (kWh) when all charges are included. Some tariffs have standing charges and other costs included. So, use this if you want to compare tariffs from different suppliers.

Meter readings – the most recent reading from your meters will be displayed. There are three types of readings: C for those provided by the customer, A for those the supplier has taken, and E for estimated.

If your meter readings are estimated then contact your supplier and give the latest readings – this will keep your bill accurate. If you’re using a smart meter then readings will automatically be sent to your supplier, so they should always be accurate.

How much energy you’ve used – without a smart meter you’ll need your bill to know how much energy you’ve used. It’s measured in kWh and is used to calculate your bill. If it’s suddenly different from normal then you’ll need to investigate to find out if you have a faulty appliance or if there’s been a billing error.

Customer reference number – a reference number personal to you so your supplier can identify you when you contact them.

Bill date and cost – usually the largest printed numbers on the first page. This is the amount you’ll be paying and when. This could be in the form of a debit (where you owe the supplier) or as a credit (where the supplier owes you). You’ll also be told what period your bill covers – usually three months. This is useful when comparing energy use during different times of the year.

Personal projection – an estimate of how much you’ll spend on energy in the next 12 months. Very useful when thinking of switching tariffs or suppliers.

MPAN and MPRN numbers – your meters will have numbers to identify them. For electricity you’ll have a Meter Point Administration Number (MPAN). This will begin with an ‘S’ and have 21 digits. For gas you’ll have a Meter Point Reference Number (MPRN) that’ll be up to 10 digits long.

Contract conditions – your bill should include the terms of the contract you’re on, such as end date and exit fees. If you’re on a fixed term energy tariff the supplier should let you know 49 days before its end. This gives you time to agree to a new contract with them or another supplier. Avoid expensive standard variable tariffs by understanding when is the right time to switch.

Your supplier’s contact details – you should find details of how to pay and contact information for your supplier. There should also be details of who to call if there’s a problem with your supply, such as a power cut or gas leak.

How are your gas and electricity bills calculated?

Gas and electricity are measured in kWh. You’re charged a fixed unit cost for each kWh you use. This will vary depending on where you live in the UK, who your energy supplier is and how you pay.

Your supplier could use several methods to work out how many kWh you're using. Some use an estimate based on your previous bills, but this isn’t accurate and can result in over or undercharging. It’s better all round if the supplier uses actual meter reading – either provided by the customer or obtained by sending someone to your home. Smart meters are the most accurate method of getting readings.

Your energy bill will also show a standing charge. This is a set price you pay per day and has nothing to do with how much energy you use. It covers national grid maintenance and keeping your home connected to the energy network.

If you have dual fuel from a supplier or you pay by direct debit you may be offered a discount. This will be deducted from your total cost. Be sure to take these into account when comparing tariffs and suppliers.

VAT is currently capped at 5% for domestic supplies of fuel and power. It will be added to the total cost of energy.

An interesting point for those working from home is to see if you can save money with a business energy contract.

What if you overpay?

If the bill is wrong in your favour, you're entitled to a refund from the energy supplier. However, this can sometimes prove a long process, with time and money spent by the consumer on phone calls, emails and letters.

In the meantime, overpayments are building up interest in the energy supplier's bank account rather than yours. In any event, this credit is usually used towards your energy bill when a higher payment is needed. For example, you might have built up a credit during the summer when you use less heating. This credit will then be used to pay for higher energy use during winter.

By regularly reading your meter and double checking it against the energy usage on your bill, you can avoid overpaying in the first place.

Be particularly careful if your bill is based on estimates, as you might be overpaying.

What if you underpay?

Underpayments usually stem from the fact that the supplier has based the bill on estimated (rather than actual) energy use.

This might sound like great news for the customer. But it could lead to a bill of hundreds – even thousands – of pounds in the long run.

Energy companies are entitled to back-bill customers if they can show they've made reasonable attempts to take your meter reading.

This is set out in the Code of Practice for Accurate Bills, developed by the Energy Retail Association and some of the leading suppliers.

The silver lining for customers comes if they can show that they're not at fault for the wrong figure.

For example, they might have provided the correct reading but the supplier's calculation might still be wrong. Or the supplier might not have billed them frequently enough.

In these cases, the energy firm can only back-bill for the last 12 months.

Make sure you're not underpaying by reading your gas and electricity meters regularly and checking the readings against your bills.

If the estimate on the bill is wrong, get in touch with your supplier and give them the accurate reading. They should then adjust the bill accordingly.

We tend to use more energy in the winter months. If you pay a fixed monthly tariff you might find your account is in credit in the summer, only for your bill to balance out when the weather gets colder.

What if you’re paying nothing at all?

If you’re receiving gas or electricity then someone, somewhere, is supplying it. The onus is on you to arrange payment with the fuel or power supplier. If you don’t, the supplier is within their right to back-bill you for the full amount of energy used.

Understanding industry speak

Annual consumption – the amount of electricity or gas your supplier estimates you’ll use over a year.

Back-billing – a bill sent to you by your supplier when you haven’t been correctly charged for your energy.

End of fixed term notification – communication from supplier to customer indicating that the fixed term period of an energy supply contract is coming to an end.

Exit (termination) fees – contractually agreed fees a consumer must pay if they cancel their contract before the agreed end date.

Meter serial number – the unique reference number for the meter at your property. If your meter changes this number will change also.

Ombudsman Services: Energy – the Ombudsman’s principal aim is to receive and consider complaints from consumers and investigate where appropriate.

Signposting – a prompt to consumers that they can consider switching tariff or supplier.