How to read your domestic energy bill

To understand your energy bill, you first need to understand the charges. Energy bills contain a lot of information, which means they can sometimes feel confusing for consumers. But it doesn’t take long to get to know your bill - and when you do, you’ll understand more about what you’re being charged and if the bill seems correct.

Energy bills typically feature three different charges:

Usage: This is the charge for the energy you’ve used during the billing period. This is calculated using your ‘unit rates’, which is the amount you pay for each unit of gas or electricity. The total charge is calculated on the number of units you’ve used.
Standing charges: This is a daily charge that you pay for a range of services, from maintenance to support services. You can’t opt out of standing charges or reduce them, even if you aren’t using gas or electricity at your property. There are a few zero standing charge deals, but they’re very rare and come with catches.
VAT: This is currently 5% on energy bills for domestic consumers.

All energy suppliers will lay out their bills differently but, as set out by Ofgem, your domestic energy bill should contain the following information:

Policy/Account number: This will be the same on every bill, and your supplier will ask you for it if you contact them.
Supply number/meter point number: These are the unique reference numbers for your electricity/gas meters.
Usage: How much energy you’ve used during the billing period.
Previous Usage: How much energy you used in the previous period.
Your Tariff: Information about what tariff you’re on.
Complaints: Information on how to make complaints including contact details for Energy Ombudsman.
Your Balance: How much money you owe or are in credit by, and a breakdown of how that final amount, outstanding or in credit, has been worked out.
Charges/Fees: Details about any charges, fees or payments made to or from your account, and information about how those fees, payments and charges are calculated.
Payment Date: The date you need to make a payment by - or when it will be debited from your account.
Changes to tariff: Details of any future changes to the energy product, tariff or price, and the date any changes are to take place.

What is an energy tariff?

An energy tariff is the amount of money you pay for your gas and/or electricity. This is set out when you sign a contract with an energy company, or the tariff they put you on when you move into a property. Energy suppliers usually offer a number of different tariffs, but the two main types are;

Fixed rate tariff: This is where you pay a set agreed rate for the full term of your contract.

Standard variable tariff: This is where your rate fluctuates depending on the price of energy.

Different energy companies have a range of different tariffs, offers and special deals – you can compare energy tariffs on price comparison sites. If you’re not sure which one is right for you, contact the energy supplier and ask them to explain how they work.

Energy consumers should make sure they understand how long the deal lasts for and if there are exit fees, should they choose to leave the agreement early.

Common misunderstandings and confusing things about your bill

When you receive a bill that seems higher than it should be, it can be distressing. Here’s how to troubleshoot whether there is a problem with the bill or not.

If your credit balance has suddenly vanished

Most people pay their bills by direct debit. That means that you’ll build up a big credit balance over a few months. However, energy firms usually bill you quarterly. This means that your credit balance will suddenly drop when the bill is due to be issued.

If you want to check if the bill is correct, have a look at the latest bill online. Add up the direct debit payments you’ve made each month and any credit balance you had at the start of the period. Compare this to the money you’ve been debited for your energy usage and standing charge. If this tallies up, then the amount you’ve been charged is correct. You can still contact your supplier if you think you have been overcharged.

If your bill has been estimated

Energy companies sometimes estimate your energy consumption, even if you have a smart meter.

If you don’t have a smart meter, then the energy supplier should still send an engineer out to read your meter, usually a couple of times a year. If you aren’t in and you don’t provide the business with a reading, then there’s a risk your bill may not be accurate.

Some smart meters may not be transmitting data correctly or may have developed faults. This can result in your bill being estimated. Your meter should show on the display if there’s an obvious technical error, but transmission problems may not be as obvious.

It’s also possible that your energy supplier might think your transmitted or given readings are wrong and may use an estimate instead.

Look for an ‘E’ or ‘estimate’ on your bill to identify if the reading has been calculated by the business. You can avoid metering problems by regularly checking the meter, providing manual readings and photographing the meter dial or display for evidence.

Volatility in energy prices

As a result of excessive wholesale energy prices, the government introduced a series of grants a few years ago to reduce bills. Some of these payments were made over a period of time, leading to artificially lower bills.

This support has all ended now, which means your current bill might have increased significantly compared to a few years ago.

Fixed rate expiry

Many energy consumers are on a fixed rate, which is where your tariff is set for a period of time, e.g. two or five years. When your fixed rate has expired your supplier will move you to the standard variable tariff, which is typically higher than fixed rates.

Unit consumption

If you think that you’ve been overcharged, then it’s relatively simple to troubleshoot if there’s a problem.

Have a look through your old bills, which should be available for free through your online account and compare your energy usage with the last two years. If the number of units you’ve used has increased over a comparable period – and you’ve not changed your energy usage - then there may be a problem.

If this is the case, then your energy company will ask you to take readings over a week or two to assess if something is wrong. They may send out an engineer, too.

Back Billing

Ofgem’s back billing rules state that an energy supplier can’t charge domestic or microbusiness consumers for energy used or for charges more than 12 months old due to the supplier’s error. If you receive a bill for energy used over 12 months ago, you may not be responsible for paying this. Contact your supplier immediately to let them know and they should adjust your bill accordingly. If they continue to ask for payment, you can raise a dispute.

Still Unsure?

If you’re still unsure if your bill is correct, you should first contact your energy supplier. If your dispute is unresolved after eight weeks or you've received a deadlock letter, you can bring the case to Energy Ombudsman for an independent review.

How to Understand Your Electricity and Gas Bills