September 17, 2020

Understanding your energy bills

Why it pays to understand your energy bill

If you used to be afraid of the dark, but now you’re afraid to put the lights on to look at your energy bill, this post is for you.

It’s easy to shove your energy bill in the ‘special filing cabinet’ (also known as the bin), but you could be throwing away cash. You wouldn’t scrunch up a hundred quid and throw it away now, would you?

Energy bills are a minefield of confusing terms and jargon. But learning what the different parts of your bill mean, will help you to save money.

Need help understanding your energy bill? Let us explain.

Why are energy bills complicated?

According to YouGov, 60% of people find their bills confusing. Research by Ofgem (‘Consumer Engagement in the Energy Market 2018’ report) also shows the key reasons people don’t switch energy suppliers: Hassle, Confusion and Anxiety:

-          47% agree “Switching is a hassle that I’ve not got time for”

-          42% agree “It’s too hard to work out whether I would have saved or not if I switched”

-          42% agree “I worry that if I switch things will go wrong”

Energy suppliers over complicate your bill in the hopes that you’ll ignore it. They’re banking on it, literally. The less you know about kWh and cubic feet (what? Exactly) the less likely you are to compare what you are paying to switch supplier.

Understanding your energy bill - the basics

Industry regulator, Ofgem, forced energy providers to make their energy bills straightforward as far back as 2011, yet there are still some who'll be confused by them. The amount of information on your energy bill will vary depending on your provider, but most bills will/should include:

1. The name of your tariff

2. Information on cheaper tariffs

3. Your energy consumption

4. Contract details, such as end date and exit fees

5. Info about how to switch providers

1. The name of your tariff

There are hundreds of tariffs available on the energy market, but you need your tariff name to see how much you can save by switching. The names often don't explain much - here's a few examples: Zap!, Simple and Winterfix, SoPorcupine, Double Gold. What you may want to know is if it's a fixed or a variable tariff. A fixed tariff means the price you pay per unit is fixed for a set period of time, a variable tariff means it could be a really good tariff, but may change at some point during the year. A variable tariff isn't a problem if you with a true auto-switching service like Flipper. If your variable rate goes up and a better deal is out there, Flipper will automatically flip you to it. If you've used a comparison site or an 'auto switching' service that only switches you every year you could end up overpaying for quite some time.

2. Your energy consumption

Bills must provide the cost of your energy from the last 12 months. If you’ve been with your energy supplier for less than 12 months, your bill will be based on that time.

3. Contract details (end date and exit fees)

Your bill will include the terms of your contract and information on exit fees and tariff end dates.

4. Information on cheaper tariffs

Suppliers must include details of discounts or premiums that may apply to your tariff compared to standard tariffs.

5. Info about how to switch providers

It’s the law that suppliers must provide customers with information about energy switching, along with advice on how to do it. Never rely on that - always do a full comparison yourself.

Understanding your energy bill - jargon buster

Remember the kWh and cubic feet we mentioned earlier? Yeah, well this is what they mean:

kWh: A kilowatt-hour (kWh) is a measurement of how much energy you’re using. A kWH is a unit of measure that equals the amount of energy you would use if you kept a 1,000-watt appliance (like a microwave) running for an hour.

Standing charge: A standing charge is the daily amount you pay to have a your gas and electricity supplied to that property. Your usage (unit rate) is charged separately on top of this daily standing charge. It can range between as little as 5p up to 80p per day - so keep an eye on the combination of both unit rate and standing charge.

Exit Fee: The fee you will have to pay the supplier if you decide to switch away from them before the contract's end date. Exit fees can be as high as £200 for a dual fuel tariff.

Cubic feet: Gas meters record the volume of gas used in cubic feet (ft³) or cubic metres (m³). Don't mix them up as there is 35 cubic feet in 1 cubic metre! Although you are billed in kilowatt hours (kWh) for your gas, it's useful to know this stuff.

Credit and debit

You’d think that "credit" is something you owe, but oh no! In the energy world, credit means that you've paid extra on your energy bill and that you’re owed money back. "Debit" on the other hand, means you owe your energy supplier money.

We asked thousands of bill payers how often they switch suppliers for their energy, broadband, home insurance and motor insurance. Using this info we worked out that the average UK householder pays £37,331 too much for bills in their lifetime.

Use our Futility Bill calculator to work out how much you have already overpaid and how much you will continue to overpay unless you switch suppliers.

“Yes, I love overpaying for my energy bills” - said nobody in the history of the universe.

More useful links and information about energy bills:

The thing with true auto energy switching is that you don't need to understand more than the basics. Our algorithm is set up to understand your bills, tariffs, unit rates, standing charges, exit fees and all of the things that effect the price you pay. We automatically switch you to the best tariff for you as soon as it finds a better deal. So no more worrying about price rises or complicated bills. We call this Flipping.

Welcome to Flipper. Keeping you on the cheapest energy, forever.

Start Flipping

Join Flipper and never overpay for energy again. We guarantee to save you money or you won't pay a penny.

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