Energy bills - we might not like them, but, like taxes and alarm clocks, they're a necessary evil. What isn't necessary, however, is how complicated they can be. YouGov research shows that only around half of the people in the UK understand their energy bills, whilst research done on behalf of uSwitch stated that as many as 75% of people find them confusing.
So we've outlined a few key pointers to help make sense of your bills - and maybe save a few quid in the process!
The Big Bit
Taking pride of place in any bill is the figure that you owe them and a date by which you have to hand over your hard-earned. But it's on the details page where you'll find out why you're paying what you're paying, and this should be of most interest to you. You should be provided a breakdown of how many units used (kWh - kilowatts per hour) and what the cost per unit is. (NB - it's really important to provide your supplier with regular meter readings so that they can accurately calculate what you've used and what you owe.)
Unit prices vary across different suppliers and tariffs, but small businesses using between 15-25,000 kWh of electricity per year should pay between 8.68p and 9.89p per kWh. If you're paying noticeably more than this then contact your supplier to double-check your agreement.
VAT and CCL charges
Most business have to pay 20% VAT on top of the cost of their bill. However, if your organisation is a registered charity or a small business that uses less than 1,000 kWh/month of electricity you should only be paying 5% VAT. And if you think you've been overpaying your VAT for a while you could be entitled to a rebate - contact your energy supplier for further details.
CCL stands for Climate Change Levy - an environmental tax introduced in 2001 to encourage businesses to be more energy efficient and reduce greenhouse emissions. It's charged at a flat rate per kilowatt hour you use (0.193p per kWh for gas, 0.554p per kWh for electricity). Again, if you use smaller quantities of energy or are a charitable organisation you could be eligible for non-payment.
Also known as a fixed charge, this is what the flat-rate amount you pay per day no matter how much energy you use - it is the actual cost charged by your supplier in providing their energy. All energy plans have a standing charge, and this is likely to vary depending on how much energy you use - a higher standing charge will typically mean paying a lower rate per kWh, whereas a lower standing charge means a higher rate. As such, if you're a heavier energy user it's probably a good idea to have a bill with a higher standing charge.
Your bill should tell you either on its opening summary page (like British Gas) or its detail page (like EDF) what tariff you're on. Now, as we all know there are many tariffs to choose from and if you feel you might not be getting the best deal you should contact your supplier to see what they can do. (Or, better yet, give us a call and we'll do it for you!) However, as a rule of thumb, if you're on a general tariff you could probably be doing better!
Smarter bills, smarter customers
We at Smarter Power think the better informed a customer is, the better choices they make. And whilst it might take a bit of getting to grips with - and maybe a couple of annoying phone calls to your suppliers - understanding your energy bill you can save you money and rid yourself of any unwanted surprises when it's time to settle up.
And, as ever, if you're unsure about your bills and whether you're overpaying for your energy, you can give one of our energy boffins a ring on 0330 333 4107 for some independent advice.