Understanding your energy bill

Do you look at your energy bill and not understand a word on it?

Are you often left bewildered when you look at the price for each unit of gas or electricity and not know what to do with that information?

You’re not alone, Money Saving Expert has created some sample energy bills to help you better understand them, find out more here: Energy bills explained: Understand them & save - MSE

With winter soon approaching, and energy prices predicted to rise slightly by January 2025 the below handy guide will help you to understand your energy bill and find out if you are getting value for money.

Key terms

You may find the following terms on your bills:

• Calorific Value (CV) – This is the amount of heat that is generated when gas is completely burned away. CV is a measure of the quality of gas. The amount for this is changed everyday.
• Meter Point administration number (MPAN) – This is the unique number on your electricity meter, also known as electricity supply number.
• Meter Point Reference Number (MPRN) – This is the unique number for your gas meter.
• Actual vs estimated reading – Actual is the reading you submit via yourself, or via regular smart meter readings whereas estimated is the reading your supplier assumes based on your expected energy use. Always try to give actual readings for a more accurate bill.
• Unit rate – To calculate your bill your energy use is multiplied by your unit rate which depends on your tariff. The unit rate is the price of each kWh that you use.
• Standing charge – a flat fee your charged whether you are using any gas and electricity or not, this is set by your supplier.
• Exit fees – These are the fees your may be charged by switching provider whilst you are still in contract.

You will usually find how much energy your provider expects you to use annually on your bill.

What is a kWh?

A Kilowatt hour (kWh) is a unit of energy, it’s a measure of how much energy you are using per hour. When you use energy, at home you are using what’s known as watts of energy. One kW is equal to a thousand watts of energy (1,000W = 1kWh).

If you check an appliance at home it will show a power rating. For example, some of our work laptops have a 45W and this is the amount of electricity an appliance needs in order to be able to work. Appliances will show their watts of energy either as kW or kWh.

When you look at your energy bill, you will see the price for electricity is different to the price of gas. To calculate the amount of energy you have used and what it has cost you, you should take the electricity or gas units of energy used and times It by the kWh rate.

So for example:

If you have used 488 kW of energy at a hourly rate of kWh of 12.67p you would be charged £61.83 for your energy use (gas or electric).

In this example, that would be 488 x 12.67 = 61.83

You will then additionally be charged a standing charge at a specific price each day, plus VAT before your total final bill.