Energy bills explained: understanding your gas and electricity bill

This guide should help you understand your energy bills. We hope it answers some of your questions. 

Useful to know: we want to make your gas and electricity bills as easy to understand as possible. But to comply with the law, we have to include lots of information. This can mean your bill runs to several pages.

Energy bill breakdown: the basics

Here’s a breakdown of some of the key points your gas and/or electricity bill will cover.

1. Tariff name: 

   Most energy tariffs have a name. It’s handy to know which tariff you’re on, in case you ever want to remind yourself of its features. You might also want to compare it with another tariff, from OVO or another supplier. You can check all the details of each tariff on our home energy tariffs page.

2. Estimated energy use in the last 12 months: 

   This shows your estimated use for the past year. It might not be the actual amount, unless you send regular meter readings. Remember to submit regular meter readings, to make sure you're only being charged for the exact amount of energy you're using. If you have a smart meter, you won’t usually need to do this.

3. Total kWh used/this cost:

   This shows your monthly electricity use. Bear in mind that it’ll be less accurate if you've not sent regular meter readings – unless you have a smart meter.

4. Total units (100s of cubic feet)/this cost: 

   This shows your monthly gas use, if you use gas. Again, it’ll be less accurate if you've not given regular meter readings.

5. Electricity supply number: 

   Your supply number is also called a Meter Point Administration Number or MPAN. It’s a useful number to know if you're looking at switching suppliers. It’s unique to your home and it’s usually 21 digits long.

6. Gas supply number: 

   Your gas supply number is also called a Meter Point Reference Number. It's the unique 6 to 11-digit number that identifies the gas account for your property. It’s also sometimes referred to as the “M Number”.  Your MPRN will most likely come in handy when changing suppliers or moving home.

   Learn more about MPRNs in our handy guide

7. Cheaper Tariff messaging:

   This information tells you if you could be on another cheaper tariff with your energy supplier. It shows you the one that’s most similar to the tariff you’re already on, and it shows the tariff that’s cheapest overall.

8. Standing charge:

   A standing charge is a daily fixed charge that goes towards the cost of supplying energy to your address. It pays for the cost of the pipes and power lines, and maintenance of your meters. It’s a bit like line rental with broadband. You pay your standing charge no matter how much energy your home uses – even if it doesn’t use any.

9. Unit rates:

   A unit rate is how much you’re charged for each unit of energy, which is measured inkWh. Each plan has different unit rates. To find out yours: 

   Check the welcome letter you were sent just after signing up. Or you can:

   1. Log into your online account
   2. Click ‘Check my details’ under ‘My Profile’
   3. Under ‘My plan’, look for the number that comes before ‘p/kWh’

   You can also check out our unit rate table. This also includes our standing charges. But if you fixed your prices a while ago, these rates may not be the same as the ones you’re paying. That’s why it’s better to check your welcome letter, or your online account.

What’s included on your bill?

Now we’ve covered some of the general points, here’s a quick guide to some of the specific info you’ll spot on your bill:

The name of your current tariff

This tells you the tariff you're on. For instance, our tariffs have names like “Better Energy” and “1-Year Fixed”. 

Your energy costs over the last 12 months

Your bill will show the cost of your energy during the last 12 months..

An estimate of your costs for the next 12 months

This forecasts the cost of your energy for the next year, based on the energy you've used till now, as well as your prices and standing charges.

Conditions of contract, including exit fees and end dates

This outlines the terms of your contract, including any exit fees, and the date your current tariff ends.

Information about discounts

Here you’ll find details of any discounts or offers that could be available on your plan – for instance, if you pay by Direct Debit.

Switching information

All energy suppliers, including OVO, must remind you that you can switch, and give you advice on how to do it

What’s not included on your energy bill?

Next, here’s an explanation of some of the info your bill doesn’t usually include:

What a “kWh” means

A kWh, otherwise known as a kilowatt hour, is a measure of how much energy your home is using. It’s not about the number of kilowatts you’re using per hour. Instead, it’s a unit of measurement that equals the amount of energy you’d use if you kept a 1,000 watt appliance running for an hour.

So if you switched on a 100 watt light bulb, it would take 10 hours to use 1 kWh of energy. And a 2,000 watt appliance would use 1 kWh in just half an hour.

What’s an Independent Gas Transporter?

Sometimes, Independent Gas Transporters are used to fit pipes instead of the National Grid. If the Meter Point Reference Number (MPRN), on your bill is 10 digits long and starts with 74 or 75, this means you're supplied by an independent gas transporter.

How do energy bills work?

Here, we’ll run through some of the key facts relating to how energy bills work, and the costs and other factors that affect them.

Why do gas and electricity price change?

The price cap

The price cap is one of the main reasons electricity and gas prices change.

All about the price cap: the cap is set by Ofgem, the energy regulator. It affects the way energy suppliers can price their energy tariffs. The cap puts a limit on how much customers on variable tariffs pay for each unit of gas and electricity. It also sets a maximum standing charge – this is used to cover the cost of things like maintenance of pipes and meters.

Useful to know: it doesn’t put a cap on the total cost of your energy – just on the price per unit. The more energy your home uses, the more you’ll pay. 

The price cap can go up or down

It all depends on the wholesale cost of energy. The cap is reviewed 4 times a year by Ofgem, the energy regulator.

The cap applies to all standard variable tariffs in the UK – these are the tariffs where your prices can go up and down.

But it doesn’t apply to fixed rate tariffs – these are the tariffs where your prices are fixed until the end of your contract.

Even if you fix your prices, your energy bills can still change\ It’s important to remember that if you use more energy then this will cause your bills to go up – even if you fixed your prices. For example, you might use more energy when the heating is turned on over winter. That’s the other main factor affecting your costs.

Using more energy will cause your bills to rise whichever type of tariff you’re on, whether it’s variable or fixed-rate. 

Wholesale costs

Changes in wholesale energy costs can cause suppliers to raise or lower prices. Wholesale costs are how much your energy supplier has to pay, when buying gas and electricity to sell to you. When availability is high and demand is low, prices are generally lower. But when demand rises and there’s less availability, wholesale prices rise.

Network and balancing costs

Suppliers are charged for the costs of maintaining and using the network of wires and pipes that carry energy to your home. These charges are passed on to customers through your bills. But because network charges may vary from year to year, this is another factor that affects the size of your gas and electricity bills.

Costs of government obligations

Other costs come from government programmes to save energy, reduce carbon emissions, and encourage everyone to use green energy. These programmes can also indirectly affect your bills.

VAT 

VAT is the value-added tax paid on household energy bills.