22 November 2017 : 
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Home / Tools / How to guides / Saving money on your energy bills / How energy bills are worked out

Saving money on your energy bills

4. How energy bills are worked out

Now you are familiar with reading your meters we will explain how the energy companies convert your meter readings into your bills by going through the calculations with you.

If you know how your bill is worked out, you will find areas where you can make reductions. It will also help you to budget your payments effectively and give you a better footing for contesting bills with your energy company if you think they have made a mistake.

A: Electricity

kWh = kilowatt hour

Electricity (and gas) bills are worked out according to how many units of energy you have used. The units are called kilowatt hours (kWhs). Your plan will set out how much you pay for each one of these units.

So, what is a kWh?

You will notice that appliances you have use different amounts of energy. Your light bulbs are probably around 40 watts (w) and your microwave is likely to be anywhere between 600 and 800 watts.

In order to understand how much energy these appliances use, you have to consider how long you use them for. If you use a 1-watt appliance for an hour, you have used a watt-hour (Wh).

  • Your 40w light bulb turned on for one hour will use 40 watt-hours (40Wh)
  • Your 800w microwave on for one hour will use 800 watt-hours
  • Two 40w light bulbs on for one hour will use 80w watt-hours
  • Two 40w light bulbs on for two hours will use 160 watt-hours

A kilowatt-hour is 1,000 watt-hours. To use a kilowatt-hour, you could keep a 40w light bulb on for 25 hours.

The calculation for this is:

1000 kilowatts ÷ 40 watt-hours = 25 hours

However you could only run an 800 watt microwave for 1 and ¼ hours before you had used up a kWh.

Your electricity meter will display the units used in kWhs. To work out your bill, your energy company will subtract the last meter reading from the current one. If you don’t provide them will the actual meter reading, or if they don’t send out someone to read your meter before they send you a bill, they will estimate how much energy you are likely to have used over the bill period. This figure will probably vary dramatically between summer and winter months.

If you would like to see how many units you have used over a set period of time, read off the figures on your dial and note them down then read them again after the period of time and subtract the first reading from the second one:

Reading one = 35675

Reading two = 36227

Units used = 36227 – 35675 = 552 kWhs

B: Gas

To work out how much gas you have used, your gas company will do a calculation to convert the units displayed by your gas meter into kWhs. Some companies provide the calculation details on your gas bill.

We at compareandsave.com do not think that knowing how this calculation works will help you to save money in any way. Your gas company will be able to provide you with details of how this calculation is worked out if it is not already on your gas bill.

The figure we will ask you to look at is the amount of “units converted to kilowatt hours”. This way you will be able to see when you are using more energy, which will help you if you choose to switch into a scheme which allows you to budget your bills.

Unit Price

Each unit you use will be charged for in pence.

Some tariffs set out an amount of energy that you will pay for at a higher rate. After you have used this set amount of units, any further ones you used are charged for at a discounted rate. Additionally, some electricity tariffs allow you to have energy at a quarter of the price if you use it overnight.

Take a look at your gas and/or electricity bills and note down:

• How many units you use in total

• How many units are charged at standard and discounted rates

• When you use the most units (if this information is on your bill)

• How much each unit costs in pence

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