How do energy bills work?
Confused by your energy bills? Our helpful guide explains all
Key takeaways
Being aware of your tariff and energy use can help you identify if there are other more affordable deals out there
If you are struggling to pay your energy bills there are government schemes and repayment plans in place that are designed to support you
Overpaying on your energy bills can build up credit for higher usage months during winter
What's on your energy bill?
Energy providers are obliged by regulator Ofgem to make bills simple. The amount of information will vary depending on your provider, but typically bills include:
The name of your plan or tariff
Your unique customer number
Your energy use, expressed in kilowatt hours (kWh)
Your balance - this can be in credit, or in debit.
How much you've paid within the billing period.
The estimated annual cost of your energy
Conditions of your contract, such as billing period, payment method, tariff end date, and exit fees
Contract details, such as unit rates and standing charges
Your energy tariff
The name on your tariff will be front and centre on your bill. It comes in very handy when you're using our energy comparison service to see if there is a better deal elsewhere.
Knowing your tariff will also enable you to see if there's a cheaper deal on offer with your current supplier, which may be an online tariff.
Your energy consumption
The amount of energy you’re using will be measured in kilowatt hours (kWh). It’s also vital to ensure meter readings are accurate:
If you’ve supplied the meter reading for the calculation, you should see the letter C for ‘customer’ listed beside the figures
If someone came to read the meter, the reading will be listed as A, or ‘actual’
An estimated reading is listed as ‘estimated’ – beware, this may cause a bill shock if the estimate is not accurate
If you receive a particularly high bill, check whether it’s based on estimated readings. If so, supply an accurate meter reading and ask for a revised bill. Many suppliers off smart meter installations for free, meaning they're less reliant on estimated usage and your energy usage is automatically sent to your supplier for more accurate billing.
How is your energy bill calculated?
The two main charges you'll see on your bill are the unit rate and the standing charge.
Your unit rate is the price per each unit of gas and electricity - this is calculated as 'pence per kilowatt house. A kilowatt hour (kWh) is a measure of how much gas and electricity you're using per hour.
For example, one load of washing may use 0.5 kWh, whereas a tumble dryer may use up to 3 kWh.
Related: Which appliances in my home are most energy efficient?
Some tariffs charge separate rates for different times of the day - such as 'Economy 7', which means your unit rate is cheaper when used 'off peak.' This is typically between 10pm and 8am, meaning you can save money on your bills by using more energy during these periods, such as charging an electric vehicle.
Electricity isn't automatically cheaper at night unless your tariff specifies a discounted rate for off-peak energy usage.
Your standing charge is a fixed cost. Even if you don't use any energy, or use less energy, you'll still pay the same daily standing charge.
Business energy bills
If you own a company and have a business energy tariff, you may see certain things that won’t be on a domestic energy bill.
These can include wholesale costs, transmission use of system charges, distribution use of system charges, and a climate-change levy.
Terms and conditions
These should be set out clearly for any tariff you’re on. If you find a cheaper tariff elsewhere, note the conditions of your current price plan – for example, any fees involved for leaving a fixed deal.
You should get between 42 and 49 days’ notice of the end of a fixed-term contract. Once you’ve been given notice of the contract coming to an end, any exit fees shouldn’t apply.
This means you’re free to switch to another tariff, and doing so will mean you avoid suddenly being switched onto a standard tariff and seeing bills rise.
Remember that it can still be worth switching to a tariff, even if you have to pay exit fees, if the saving on the new tariff is greater than the fees you would pay.
For more information on what your options are when your tariff is coming to an end read our dedicated guide.
What if I pay by direct debit?
Even if your bill payments are taken by direct debit from your bank account, you should still receive a bill.
Negotiate a different payment amount if you think you’re paying too much or too little.
But remember that direct debit customers typically overpay in summer, and underpay in winter.
Can I get help with my energy bills?
There are a range of options available if you are having trouble paying your energy bills. It may seem counterintuitive, but the first thing to do is to speak with your supplier and see if you can arrange a repayment plan that you can afford.
If you are on Universal Credit, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), Income Support or Pension Credit, you can use the Fuel Direct Scheme to pay your unpaid bills directly from your benefits.
Related: Can I get government help with to pay my energy bills?
Will my gas and electricity show up on the same bill?
If you get your gas and electricity from the same provider, known as dual fuel, you will get gas and electricity bills sent at the same time.
However, these will be separate documents so that you can see exactly how much you’ve paid for electricity and gas.
If you get gas and electricity from different providers, you will get a bill for each.
Should I overpay my energy bill?
Overpaying your energy bill when you have some spare cash is a good way to build up credit and possibly even lower payments in the colder months, when you use more electricity and gas. Some providers won’t let you build up too much credit, however.
Because you don’t use as much energy in the summer, you may find that you have so much credit that you want to withdraw the funds.
Providers should be able to arrange this for you - call them directly to discuss your options.
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