How to work out your energy bill
With all the different tariffs adding to the complication of working out your gas and electricity usage, then trying to work out how much it is actually costing you, is leaving many people confused.
Here are some examples of different tariff types
Standard energy
Standard energy no standing charge
Fixed price
Capped price
Online discounted energy
These are the most common tariff types. Then the energy suppliers simply elaborate on the names by giving each tariff a unique name.
Standing charge or no standing charge?
This is a major confusion. You are not generally better off with a no standing charge option. When you pay a standing charge, this will be set at a daily amount. You would be charged this whether or not you used any gas and electricity.
With the no standing charge option, you pay a higher unit rate for the first so many KWH of energy you use over any given period. For example:
Typically for the first 900 KWH you use over 1 year for electricity, you may be paying around 26.222 pence per KWH. Then the rest of your electricity units (KWH) would be charged at a lower rate, say 14 pence per KWH.
This means you are paying an extra 12.222 pence per KWH for the first 900 KWH you use over the year. That amounts to £110
On your bill, the no standing charge option will show that you are paying 2 rates. This is also called a 2 tier tariff.
Standing charge option
With a standing charge tariff, you may be paying 30.1369 pence per day, then a flat rate of say, 14 pence per KWH. This standing charge amounts to £110 per year
As you can see, the standing charge, and the no standing charge options work out the same.
Typical electricity usage
The average UK electricity consumption is currently 3300 KWH per year. KWH is the unit of measure for energy consumption, It means Kilowatt Hours.
You electricity meter measures KWH
Assuming you have taken a reading from your electricity meter:
previous reading taken 12 months ago = 111233
Current reading = 114533
Units used = 3300
You are on the no standing charge option:
KWH at 26.222 p = 900 = £236
Remainder KWH = 2400 at 14 p = £336
Total = £572
Or if you are on the standing charge option
Standing charge 30.1369 X 365 days = £110
KWH at 14 p = 3300 = £462
Total = £572
I hope that has taken the confusion out of the difference between the options of standing charge, or no standing charge.
The only time I would see the benefit of a no standing charge tariff, would be if you have a holiday home which is only used on rare occasions.
More confusing energy tariffs
There appears to be hundreds of different tariffs.
The cheapest deals are available through the internet. Most of the suppliers offer a discounted tariff to win your custom. These tariffs run for a fixed term. In many cases, this is about one year. At the end of the term, the supplier will place you on their standard tariff.
Fixed price
These prices are fixed for the term specified. This means the price will not change if there are any increases, or any price reductions made. Fixed price does not mean you you will pay the same price for all of the energy you have consumed. It is your KWH rate which is fixed.
For example: You normally use 3300 KWH of electricity per year, but you have now purchased a tumble dryer, and you are now using 4300 KWH per year. You will have to pay for the extra 1000 KWH you have used.
Capped Price
Similar to fixed price, but if there are any reductions, a capped price energy deal can come down. It will not increase with any price increases during the term of the capped price energy deal.