Understanding Energy Bills

Transcription

1 Understanding Energy Bills Energy bills are notoriously difficult to understand. YouGov research on behalf of uswitch found 75% of people find energy bills confusing, and only 4 in 10 could understand the calculations on their bill. Even worse, energy consultants Torse have found that more than 22% of bills contain errors. However, understanding your bills is crucial to working out if your business is paying too much for gas and electricity. In this guide, SUSTAIN Lincolnshire demystifies energy bills and helps you to get the best value deals from your supplier. What does my electricity bill tell me? Source: Centre for Sustainable Energy 1. Contact details for your electricity supplier. 2. Customer reference or account numberneeded when contacting your supplier. 3. Date the bill was issued. 4. The period the charges relate to- usually 3 months. 5. Total of the last bill and when it was paid. 6. Total cost of electricity used during the billing period, before VAT is added. In this case, the cost has been estimated. 7. VAT charged on the electricity supplied during the period- usually 20% for businesses and 5% for domestic use, with some exceptions. 8. Total amount owed- how this figure has been reached will be explained on the other side of the bill. 9. MPAN or meter point administration number. 10. Your tariff (also called a package or plan )- this determines the rate you pay and other terms and conditions. 11. The meter reading at the beginning of the billing period. 12. The meter reading for the end of the billing period. The E means that it is an estimated, rather than an actual, reading. 13. The last reading minus the previous reading equals the amount of electricity you ve used, or are estimated to have used, in the billing period. 14. This shows that the first 222 kwh of electricity used are charged at a higher rate than the electricity used after this. 15. Total amount owed before VAT is added. 16. An explanation of estimated meter readings (see points 6 and 12, above). 17. Details of how to get your bill in another format. 18. A payment slip to pay your bill at the bank or by post. Another way to pay your bill is by monthly direct debit.

2 What does my gas bill tell me? 1. Contact details for your gas supplier. 2. Customer reference or account numberneeded when contacting your supplier. 3. Date the bill was issued. 4. The period the charges relate to- usually 3 months. 5. Total of the last bill and when it was paid. 6. Total cost of gas used during the billing period, before VAT is added. In this case, the cost has been estimated. 7. VAT charged on the gas supplied during the period- usually 20% for businesses and 5% for domestic use, with some exceptions. 8. Total amount owed. 9. MPRN or meter point reference number. 10. Your tariff (also called a package or plan )- this determines the rate you pay and other terms and conditions. 11. The meter reading at the beginning of the billing period. 12. The meter reading for the end of the billing period. The E means that it is an estimated, rather than an actual, reading. 13. The last reading minus the previous reading equals the amount of gas you ve used, or are estimated to have used, in the billing period. 14. Gas is charged by kilowatt hour (kwh) so metered units are converted to kwh here. 15. The first 1430 kwh of gas used are charged at a higher rate than the gas used after this. 16. Total amount owed before VAT is added. 17. An explanation of estimated meter readings (see points 6 and 12, above). 18. An explanation of how the volume of gas used has been converted into kilowatt hours (see point 14 above). 19. A payment slip to pay your bill at the bank or by post. Another way to pay your bill is by monthly direct debit. Source: Centre for Sustainable Energy

3 What is an annual statement? In addition to your regular bills, your supplier should send you an annual statement detailing: The name of your tariff. How much energy you ve used over the last year. How much you re likely to pay over the next year. Any discounts, premiums or terms and conditions on your tariff. The annual statement includes all the information you need to change supplier. If you re looking at switching, it will also help you to more accurately forecast future costs than using your last quarterly bill alone. What is the legal situation? Ofgem- the Office of Gas and Electricity Markets- is a government department and independent regulatory authority which aims to protect interests of electricity and gas consumers. During 2013 and 2014, Ofgem introduced a standard of conduct which all suppliers must adhere to. Full information is on the Ofgem website, but the key changes are: Suppliers cannot increase prices- or make any other changes- on fixed term deals. Customers must be given a day window before the end of a fixed term tariff to decide whether they want to stay or switch supplier. The number of tariffs must be reduced to simplify the market. Tariffs should be structured in such a way to allow easy comparison. Dual fuel and online discounts must be clearly stated on bills. Customers must be informed of their cheapest tariff. Customers on dead tariffs (deals which are no longer on the market and are more expensive than current offers) must be transferred onto the cheapest available tariff. What should I do? Read your meters Your supplier is only obliged to read your meter once every two years. To make sure that your bills are accurate, check meters at least quarterly and send the readings to your supplier. You don t have to pay an estimated billcustomers can provide their own readings and ask the supplier to reissue an accurate bill. Monitor and manage your energy use Keep your own records to monitor your energy usage- SUSTAIN Lincolnshire can help with this (see useful links below). This will help you to identify any unusual consumption patterns, and see when and where you use most energy, enabling you to identify savings such as changing to a different tariff or supplier or changing timer settings on equipment. Check your bill Is the bill estimated or actual? If it s an estimate, take your own meter reading and ask for a revised bill. If it s an actual reading, check it against your meter. Is the MPAN number correct, i.e. are you being charged for the correct meter? Are all calculations shown on the bill correct? If you re paying by Direct Debit, your supplier will forecast your annual spend and divide it into equal monthly payments. Using your own records, check that the forecast is accurate. If you don t agree with your supplier s estimate, contact them to discuss the calculation. Do you understand what charges are included in the bill and how the total has been reached? Make sure you re familiar with the tariff (including unit charges and whether these differ across the day); the maximum available capacity per month (shown in kva) and the charges for exceeding this; and additional charges such as the Climate Change Levy see below for more information on the CCL.

4 Shop around Using your annual statement, regular bills and own records, regularly compare different tariffs and suppliers to see if a more competitive deal is available. It s particularly important to pay attention to this if you re nearing the end of your current tariff or plan. Make sure that you negotiate a new deal or switch supplier before the end of your contract- otherwise, you could be automatically switched to an expensive default tariff. Lincolnshire residents and businesses can collectively negotiate cheaper tariffs through Lincolnshire County Council s Lincolnshire Energy Switch- see further information, below. Understanding energy bill jargon A C Calorific value (CV) Climate Change Agreement Climate Change Levy Contract end date Conversion factor The letter A next to a meter reading indicates that this is an actual reading taken by the supplier. The letter C next to a meter reading indicates that the reading was taken by the customer. Calorific value is essentially a measure of the quality or usefulness of the gas supplied. CV is a scientific term used to describe how much heat is generated when a specific volume of gas is completely burned away. Gas passing through the National Grid has a CV of 37.5MH/m3 (Megajoules per cubic metre)to 43.0MJ/m3. CV can vary as it affected by moisture levels (for example, proximity to the coast or weather changes) but the CV for your specific area should be displayed on your gas bill. Climate Change Agreements are voluntary agreements which allow energy-intensive sectors to receive a reduction of up to 90% in the Climate Change Levy, in return for signing up to government-agreed energy efficiency targets. A government levy introduced in 2001 whereby businesses are charged for every unit of non-renewable energy used. No levy is due on renewables, if a business uses less than an average of 33kWh electricity or 145kWh gas per day, or if a business has a domestic or residential aspect e.g. a care home or B&B. The date on which the current tariff ends and prices will increase if a new deal is not negotiated. Gas needs to be converted from the units measured on your meter to kwh for billing. This can be calculated as follows: 1. Number of units used- as read from meter. 2. If an imperial meter, convert from imperial (cubic feet/ ft³) to metric (cubic metres/ m³) by multiplying units by Multiply by volume correction factor ( see below). 4. Multiply by calorific value (see above). 5. Divide by kwh conversion factor (3.6). For example: Stages to convert gas units to kwh Example 1. Number of units used Conversion from imperial to metric (x 2.83) 100 x 2.83 = Multiply by volume correction factor (x 283 x = ) 4. Multiply by calorific value (see above- in this x 39.3 = 11, case 39.3) 5. Divide by kwh conversion factor 11, = 3,

5 Correction factor Dual fuel E IGT kwh MPAN The correction factor takes account of differences in temperature and pressure which affect the volume of gas. It is always for all suppliers and on all bills/ statements. Tariffs where both gas and electricity are received from the same supplier. The letter E next to a meter reading indicates that this is an estimate made by the supplier. Some properties are supplied by pipes owned by an independent gas transporter (IGT). No difference will be apparent to the premises holder, but higher costs will be charged to reflect the fact that gas has been transported across both the IGT and National Grid networks. IGT status will also limit your choice of gas supplier. Kilowatt hour- the standard measurement of energy. A kilowatt hour is the energy used when one kilowatt of power is expended for 1 hour of time. Your prices will be set per kilowatt hour of energy used. Meter Point Administration Number, supply number or S number. A unique reference number identifying your property s electricity meter. It should be shown on your electricity bill in the following format: MPRN Notice period NSC Primary and secondary units Smart meter charge Standing Charge Unit Variable Direct Debit VAT If you can t find your MPAN, contact your electricity supplier for help. Meter Point Reference Number or M number. A unique 6-10 digit reference number identifying your property s gas meter. The MPRN should be stated on your bill, but if you can t find it call the Meter Number Helpline on The point at which the current supplier must be notified if you intend to switch to an alternative supplier at the end of the contract. No Standing Charge (see definition of standing charge, below). No fixed charge- the customer is only charged for the units of electricity used. This refers to tariffs where units are charged at two different rates e.g. day and night units or units up to a certain amount at one cost, with additional units at a different cost. Many suppliers now provide smart meters as standard. Some suppliers show the cost of switching to smart meters as a separate line on the bill, while others include it in the overall charge. The fee paid irrespective of whether any power is used. A standing charge doesn t necessarily make the tariff more expensive, as the unit charge can be lower. Almost all electricity bills include a standing charge, but not all gas bills do. A unit is the amount of energy (gas or electricity) used. The units are then converted to kilowatt hours using a standard formula (see conversion factor, above). Cost is usually shown as per kwh. A type of direct debit which allows the supplier to adjust the amount taken from the customer s bank account each month to pay off the outstanding bill. The supplier does not have to give notice to the customer before changing the amount. Value Added Tax. Most businesses pay 20% VAT on gas and electricity. However, if a business uses less than an average of 33kWh electricity or 145kWh gas per day or has a domestic or residential aspect (e.g. a care home or B&B), VAT is charged at 5%.

6 Where can I find out more? Uswitch provides annotated sample energy bills from the main suppliers, as well as a jargon buster: bills/. Businessspecific advice is also available: ess-energy/energy-bills Money Saving Expert advises on how to understand and reduce your energy bills: es/understanding-energy-bills FAQ for business energy bills: Ofgem: Business Juice s guide to energy bills and other energy costs: guides/understanding-business-energy- bills/ Which s guide to the main energy suppliers and how to switch: Resource monitoring spreadsheets to track energy usage are available to download free from the SUSTAIN Lincolnshire website: Lincolnshire County Council s Lincolnshire Energy Switch: ommunity-and-living/lincolnshire-energy- switch/ article For further information, contact SUSTAIN Lincolnshire on or business@pect.org.uk. You can also visit our website