Reading your energy bill: what you need to know

Energy bills can seem daunting. Page after page of technical jargon can leave you asking, “What is a standing charge?” or, “Is 10 kilowatt hours a lot or a little?”. So, here we explain the key terms you need to know when reading your energy bill.

Starting with the basics: what is a watt?

To read your energy bill (and know what to do with the information once you’ve ready it), you need to understand the basics. That starts with understanding ‘watts’ and ‘kilowatts’.

‘Watts’ are used to describe how ‘hungry’ for power a device is. A standard microwave, for example, is pretty hungry, needing between 700 and 1,200 watts depending on the model. (When we’re talking about more than a thousand watts, we often talk about kilowatts instead – one kilowatt is 1,000 watts.) In contrast, your phone charger isn’t very hungry at all, at just 3-7 watts. Your microwave needs more power to function than the phone charger. 

What’s the difference between a ‘watt’ and a ‘watt hour’?

If a ‘watt’ is a measure of how hungry a device is, then a ‘watt hour’ is a measure of how much power it ‘eats’ over time. So, if you use your power hungry 1,000 watt (1 kilowatt) microwave for five minutes every day, by the end of a year it will have ‘eaten’ a whopping 30,417 ‘watt hours’ of electricity. Again, when we’re talking about this many watt hours, we can make the numbers more manageable by dividing by 1,000 to calculate the number of ‘kilowatt hours’. One kilowatt hour is 1,000 watt hours, so the microwave will have used 30.417 kilowatt hours over the year.

If we only used our much less hungry 6 watt mobile phone charger for five minutes every night, by the end of a year it would only have used 182 watt hours (or 0.182 kilowatt hours). More realistically, if we left the charger plugged in for eight hours a night – almost 100 times longer than our five minutes of microwave use, it will still only have used 17,520 watt hours (17.52 kilowatt hours) by the end of the year – less than half of the energy used by our five minutes of microwaving.

To avoid having to write out ‘kilowatt hours’ in full, suppliers usually shorten it to ‘kWh’ on your bill.

Okay, I understand electricity, but what about gas?

The most important thing to remember is that your gas bill is also calculated in kilowatt hours, just like electricity. But, to work out how many kilowatt hours of gas you’ve used, the supplier has to do a few extra calculations.

That’s because the mains gas that is pumped into UK homes is actually a mix of different gases (the main one being methane). The mix determines how much potential energy will be released from the gas when it is burned. The supplier needs to know the volume of gas you’ve used (measured in cubic metres, or m³ for short) and how much potential energy it contained (known as its ‘calorific value’) to work out how much energy you’ve used in kilowatt hours. When you’re reading your energy bill, you may see your supplier quotes both the volume of gas you’ve used, and the equivalent number of kilowatt hours.

What’s the difference between a standing charge and a unit rate?

Your unit rate is how much you pay per kilowatt hour (kWh). The more energy you use, the more you will pay. 

The standing charge is how much you are charged per day to maintain your connection to the energy grid. You pay it regardless of how much energy you use. For example, if your standing charge is 50p, you will be charged £15 per month (30 days X 50p) even if you turn all of your appliances off. You are charged a standing charge for each meter, so if you have both electricity and gas in your home, you will pay two separate standing charges. 

Understanding your tariff name

There are times, particularly when you are switching suppliers, when you may be asked for the name of your current tariff. Different suppliers name their tariffs in different ways, e.g ‘Fixed May 2023 DD 36’. Here are some things to look out for: 

1. Payment type – if your tariff name has ‘DD’ in it for example, this tells you that you are paying by Direct Debit. 
2. Length of tariff – many tariffs state the length of the contract either in number of months or years.
3. Whether the tariff is fixed or variable – for the differences between these, see our separate post. 
4. A date – this can be the most confusing part. Some suppliers use the date that the tariff was first offered to customers, while others use the date the tariff ends. Check your bill if you are unsure what the date in your tariff means. 

Finally, what are those funny numbers in the corner?

All electricity and gas meters are given a unique identifying number known as an MPAN (electricity) or an MPRN (gas). These numbers are used by suppliers to identify which meter is yours. They are often made up of numbers indicating your region, and your meter type – e.g whether it is single rate meter, economy 7 meter , or a business meter etc. MPANs are often written across two lines (see below), while MPRNs are made up of a single line of numbers.  

If you are ever asked for your MPAN or MPRN and don’t know what it is, suppliers must show it on every bill. Don’t check the meter itself as MPRNs and MPANs usually aren’t shown on the meter. 

If you need more help reading your energy bill, or the ins and outs of a suppliers quote, take a look at our guide on calculating energy quotes.