How to Read Your Energy Bill: Unit Rates, Standing Charges and kWh Explained
An energy bill can feel like it was written in a different language. Once you know four terms, though, you can check that you are being charged correctly and compare deals with confidence.
The unit rate
The unit rate is the price you pay for each kilowatt hour (kWh) of electricity or gas you use. It is quoted in pence per kWh. One kWh is the energy used by a 1,000 watt appliance running for one hour, so a 2,000 watt electric heater uses 2 kWh every hour it is on.
The standing charge
The standing charge is a fixed daily amount you pay just for being connected to the network, whether you use any energy that day or not. It is quoted in pence per day and is charged separately for electricity and gas. Two tariffs can look very different on unit rate alone, so always look at the standing charge as well.
Meter readings and estimated bills
If your supplier does not have a recent reading, it will estimate your usage. Estimates are often too high or too low, which leaves you with a large catch-up bill or a pile of credit. Take a reading on the same day each month, photograph the meter, and submit it through your supplier's app or website. If you have a working smart meter, readings are normally sent automatically.
How to check your bill
- Confirm the meter readings on the bill match your own photos.
- Check whether the readings are marked as estimated or actual.
- Look at the unit rate and standing charge for each fuel and note the date they apply from.
- Check how much you pay by direct debit compared with what you actually use.
Understanding the price cap
In Great Britain, the Ofgem price cap limits the maximum unit rate and standing charge suppliers can charge on standard variable tariffs. It is not a cap on your total bill, because the more energy you use the more you pay. The cap is reviewed every three months, so rates can change from one quarter to the next.
Direct debit and credit balances
Many suppliers spread your cost across the year with a monthly direct debit. In winter you will probably use more than you pay, and in summer less. A small credit balance is normal. If your account is in large credit for months, you can ask your supplier to review and reduce your payments, and you are entitled to request a refund of credit.
Comparing deals
When you compare tariffs, enter your real annual usage in kWh, which is shown on your bill or in your online account. A comparison site that uses a typical household figure may not reflect your home. Fixed tariffs protect you if prices rise, but check any exit fees, and compare against the current cap rather than last quarter's.
The best first step is simply to know your numbers: your annual kWh, your unit rates and your standing charges. With those to hand, every other decision about switching, insulating or upgrading gets easier.