With all the recent news about energy increases, price hikes, and everything else that is going on in the world, it’s easy to get bogged down and confused by the jargon being used.
When it comes to how we spend our money, being in the know and understanding where it is going is more important now than ever.
Recent research by the Literacy Trust (2021), working with Octopus Energy, highlighted that more than one in five 18- to 24-year-olds responsible for paying energy bills said that they sometimes avoided reading their bills because of the language used (this figure was 3.1% in over 75s).
Only 1 in 11 of the people surveyed in the lower age range were able to identify the correct definitions of six terms commonly used on bills.
Do you know your kilowatt hours from your cubic feet? Don’t worry – We’ve got you covered!
Demystifying Energy Bill Language
An energy bill is usually broken down into sections –
- Electricity usage / Consumption value
This is the amount of energy that that you have used during the billing period. It will be displayed in ‘kilowatt hours’ (kWh). A kilowatt hour describes a kilowatt (1000 watts) being used for an hour. This is a measurement of energy.
Working out the amount each appliance consumes/will consume in electricity can be found by multiplying the wattage of the item (from the manufacturer instructions / power or safety labelling with the number of hours used, and then dividing by 1000.
- Gas usage / Consumption Value
Gas usage is measured in ‘cubic meters’ or ‘cubic feet’, with the consumption showing on the bill or statement as an ‘m’ or ‘ft’ with a small number ‘3’ next to it. ‘Cubic metres’ describes the ‘metric’ measurement and ‘cubic feet’ the imperial measurement.
It is important to understand the way your meter is measuring to ensure you are being billed correctly, and this should be displayed somewhere on the meter. Smart meters may have the option for both displays. There should be a calculation showing on your bill to convert one into the other.
- Estimated/actual energy usage
This confirms whether the bill is estimated or an accurate representation of your energy use. The bill will only be estimated if you are not using a smart meter or have not given a meter reading to the supplier for this billing period.
· Fixed term contract end date (fixed term tariff users only)
This shows the date that your fixed term tariff contract will end. This kind of tariff uses a fixed rate of energy pricing for a specific period. If you wanted to end the contract before this end date, you should consider any exit fees outlined in your contract before making a decision to end or change supply, as well as the current energy prices of variable tariffs.
· Breakdown of the costs
This section of the bill will explain how your bill is calculated, considering the three sources of cost:
- Cost – Firstly, your energy usage cost will be calculated by multiplying the amount of energy you used (measured in kilowatt hours for electricity or cubic feet or meters for gas) by the energy price rate of your tariff. You may have a tariff with two rates, in which case both will be displayed and individually calculated.
- Standing Charges – Secondly, there is a daily standing charge that must be paid on top of energy usage costs. This is a set amount each day and varies, depending on where you are and the type of meter you have. This must be paid regardless of energy usage and can be a reason why some consumers fall into debt with their supplier, despite using very little energy during certain periods.
- VAT – Finally, you must pay Value Added Tax (VAT) for the energy you purchase from the supplier because it is a taxable transaction of goods and services. This is added on by the supplier to the bill you receive. Balances and totals should have information next to them on whether they include, or exclude VAT).
· Current Tariff
This section gives the name and basic details of your current tariff. A tariff is the amount you are charged and should have information on standing charges as well.
· Exit fee
This is the amount that will be owed if you choose to leave your current tariff before its end date.
· Payment method and billing interval
This shows how often you will be billed. This can be once every 3 months (quarterly) or monthly, but you should check your contract if you have any doubts. It also displays whether you have a credit or prepaid meter and the payment method (e.g., direct debit).
- Previous and current meter readings
This section is a display of two-meter readings, each with a date. One is what your meter reading was at the end of your previous billing period and the other shows the energy meter reading at the end of your current billing period. You are usually billed for the difference between these, less any payments made or credits received.
· Meter reference number (MPAN) or Meter Point Reference Number (MPRN)
This is the number that is used to identify your energy meter. This number is essential if you wish to find out who your supplier is or to change your supplier. This number is unique to the meter you have.
Recent Price Increases
The price of gas has risen significantly, impacting on the prices of other goods and services, with a knock-on effect, meaning that the cost of living has risen sharply for many.
This increase affects the cost of transportation, fuel, and energy, making many vital services significantly more expensive for virtually every household in the country.
The immediate consequence of this is the alarming rise in energy costs.
What is the Energy Price Cap?
The energy price cap is intended to ensure that consumers pay a fair price for their energy usage. It limits how much suppliers can charge you per unit of gas or electricity, based on the underlying costs.
This limit is not present on a total bill, which will vary depending on the units of energy used during a billing period. When you hear about a total figure when the price cap is being discussed, this is usually referencing the average household usage.
Energy Price Cap Rise
The energy price cap also increased on the 1st of April 2022, meaning that those who are on a standard rate tariff will see their annual energy bills increase by an average of almost £700.
The price cap was intended to keep costs low for energy consumers, protecting those on lower incomes and people classified as ‘vulnerable’, but this rise poses a potential threat to them.
Advice Direct Scotland anticipate a significant rise in fuel poverty and as a result, rationing of many essential goods as those on a low-income try to maintain their energy supply.
How will a rise in the cost of living affect me?
As previously discussed, rising costs have also had an impact on the prices of many goods and services, causing the ‘cost of living’ to rise.
This increase will show on everything, including rent, food, and transport. It is important to note that many people are already living in a situation where even a slight income disruption could result in significant hardship.
Although the traditional practical ways of saving money on household costs, such as avoiding leaving electrical gadgets on ‘standby’ and turning heating down on washing can help, the situation we find ourselves in now means that these efforts often don’t even put a dent in the deficit we face.
As a result of this, many of us now need to seek additional support when it comes to living costs and getting by.
Experts have predicted that bills could soar by 45%-50% (average bills in the UK to be £2,000 next year) which will place massive stress on most households especially those on low-incomes who are already struggling to cope with existing energy bills and general living costs.
The detriment experienced by many households across the UK has been well-documented with figures highlighting that an estimated 8,000 deaths occurred last year due to people living in cold homes (up by 20% from last year).
How can ADS Help?
moneyadvice.scot provides free, practical money and debt advice and support to the people of Scotland and are regulated by the Financial Conduct Authority (FCA).
There are a variety of solutions that can help if you are struggling with debt or have concerns about your finances, both formal and informal.
Our specialist debt and money advisers can work with you to assess all of the options available to you and help you get back on track.
You can use the Advice Direct Scotland benefits calculator to get a free and impartial assessment of all the benefits you may be entitled to, and what you must do to claim them.
The benefits calculator will ask some questions about your circumstances, your household, and your finances. It is important to bear in mind that the results of this calculator are a guide to potential entitlement and are dependent on your answers.
For more information on the various sources of support available, or for help checking your entitlement to benefits, visit advice.scot, or contact one of the team on 0808 800 9060 (Monday to Friday, 9am – 5pm).
energyadvice.scot provide information and advice on a range of energy-related matters, including directing Scottish citizens to sources of support available, including support for energy debt and those who find themselves rationing energy to afford other essentials.
More information is available by visiting the website, which has a dedicated Knowledge Centre covering most things energy, or by calling 0808 196 8660 (Monday to Friday, 9am – 5pm).
The Home Heating Support Fund
homeheatingadvice.scot work in partnership with the Scottish Government to deliver the Home Heating Support Fund (HHSF) for Scottish households struggling with energy costs.
The HHSF seeks to provide financial relief to energy consumers who are experiencing significant financial hardship.
It strives to provide this support to households regardless of the fuel or payment method used (e.g., users of prepayment meters, district heating networks, and unregulated fuels).
This also includes assisting Scottish citizens identified as ‘self-rationing’ energy (e.g., those facing a ‘heating or eating’ scenario).
Other Sources of Support
Warm Home Discount – You may be able to get a credit applied to your electricity bill under the Warm Home Discount Scheme if you are either getting the guarantee credit part of Pensions Credit, or you are on a low income. Your supplier should be able to tell you if you qualify. You can also visit the gov.uk website for more information.
Cold Weather Payment – If you are already claiming certain benefits, you can get a payment when the weather is very cold in your area. You will get a payment if the average temperature in your area is zero degrees Celsius (or below) for 7 consecutive days. Further information on Cold Weather Payments is available on the gov.uk website.
Child Winter Heating Assistance (Scotland Only) – This is an annual payment whereby if there is a child or young person in the household who receives the highest rate care component of Disability Living Allowance (DLA) for children in the qualifying week, then you will be entitled to receive the £200 payment. You can find out more about this payment HERE.
If you are struggling with debt or arrears with your energy supplier, it may be possible for you to apply to get a grant from a charitable trust, or your energy supplier’s hardship fund to help pay it off.
The British Gas Energy Trust offer certain grants and schemes that can be claimed by anyone, and you do not even need to be a customer with them.
There are also energy suppliers who offer grants specifically for their customers:
- Scottish Power – Hardship Fund
- The OVO Energy Fund
- ON Energy Fund initiative
- EDF Priority Services Register Information – extra help for those in need
It is important to remember that if you are considering making an application for a grant, you will be required to provide detailed information about your financial situation. It should be noted that it may take some time to complete your application, as many of these funds are in high demand.
The most important thing to remember when it comes to the increased cost of living, energy price hikes, and debt is that you are not alone. Advice Direct Scotland have several services that can help. Pick up the phone, drop us a message, or visit advicedirect.scot to see the range of services we provide that can help, and how to get in contact.