For most people who struggle to read their electric bill, the electric bill has become a thing. When you receive your electric bill, the first thing you do is look at the total. You may wonder why the bill is so high and what you can do to reduce your electric bill.

These thoughts are quickly drowned out by all the other things you must do. You just pay. Review what you just bought. Read each item and the price. Add up the total cost. Verify you haven't been overcharged. Most people do this daily, with almost every bill.

If you're looking for bill help, this article, “How To Understand Your Energy Bill,” can help you.

How To Check Your Energy Bill? Steps Included!

Firstly, make sure all the details are correct. If any of the information below is incorrect, you could pay the wrong amount or even for someone else's gas and electricity.

Make sure the name on your bill is correct, it isn't addressed to 'the occupier,' and it includes address details.

1. There are two main types of information in your electric bill: your basic account details, your bill summary, your current charges and your electric price, and a more detailed breakdown of your electricity usage.

Verify that the meter serial numbers on your bill correspond to the serial numbers on your gas and electricity meter, respectively. Verify that the MPAN (meter point administration number) and MPRN (meter point reference number) on your electricity meter correspond to the 12-digit code found on your electricity meter and the 6- to 11-digit meter point reference number on your gas meter, respectively.

Check that the dates covered by the billing period are before or after you move into the property.

Contact your supplier to ensure this or any other incorrect information is corrected. A new bill will then be sent to you.

What is a kWh on Your Energy Bill?

To fully comprehend your bill, it’s essential to understand what kWh is. A kWh stands for kilowatt-hour, a unit of measure for the electricity consumed in a given hour. In reality, kWh stands for two things: Wattage refers to the speed at which electricity is consumed. Time refers to the time that electricity is used at that speed.

Which Costs Are Included In Your Energy Bill?

When figuring out how much electricity you’re paying, you must understand your electricity bill in detail to compare your usage to its price. The main costs included in your energy bills are described below:

Capacity Cost

One of the first things you’ll see on your electricity bill is a “capacity cost.” Typically imposed on commercial customers, this charge ensures the utility has enough power to meet its customers' total power demand.

While you won’t know much about how this rate works, you can help reduce these costs for everyone by using your main appliances and equipment during the off-peak hours and cutting down on your energy usage during the peak hours.

The peak hours vary depending on where you live and the time of year. Contact your electricity provider to find out how to reduce your usage during peak hours in your area.

Electricity Cost

On your energy bill, you’ll see a list of your home’s electricity usage for the month, broken down by kWh. There are two ways you can manage this portion of your energy bill. Firstly, you can reduce home energy charges by using less electricity.

Secondly, you can get more control by choosing a supplier with a fixed-rate contract to avoid rate spikes caused by seasonal changes, changes in energy supply, or other external factors.

Network Cost

These are for gas lines and electricity cabling that transmit power across the country to your home or workplace. Network providers charge your supplier a regulated price for using your energy network. The money spent on the network is used to maintain, operate, and upgrade the network.

Network costs change over time. For instance, network costs may reflect usage or changes in allocating costs across different network segments. Network costs also include 'balancing' charges. The balance of supply and demand for electricity and gas is balanced daily.

Wholesale Cost

Wholesale energy prices are the price you pay for energy purchased to supply your homes or businesses. They account for around one-third of your total energy bill. Wholesale electricity prices are determined by the wholesale market, where suppliers purchase energy from electricity and gas producers.

Prices can fluctuate rapidly depending on global gas, oil, coal, and renewable fuel demand. Wholesale prices also depend on demand. Prices are lower when there is less demand and higher when there is more availability. Prices tend to increase when there is more demand and lower prices when there is less availability.

Most suppliers purchase energy ahead of time for their tariffs (some by up to 2-3 years) and tend to purchase energy on fixed-term contracts closer to the time of the tariffs' launch. These differences mean that wholesale price changes do not affect all tariffs simultaneously.

Know About Energy Bill Payment Date!

This is when your bill will arrive at your energy supplier, or if you pay Direct debit, when your bill will arrive at your account. There are many ways to pay for energy, but direct debit is the most straightforward and convenient option with a credit meter.

Direct debit payments are made directly to your bank account (out-of-balance payments) to avoid unnecessary late payment charges. Fixed monthly direct debit payments allow you to spread your energy costs over 12 months.

Summary

How to understand your energy bill is crucial for every customer who is paying any energy bill. Check that the information on the bill is correct if you’re struggling with gas or electricity bills. Don’t rely on your supplier’s estimated meter readings. When moving, provide your supplier with meter readings for old and new properties.

Now that you know your energy usage – gas, electricity, or both – take advice, monitor your monthly energy bill, and see how much money you can save.