How to Read Your Energy Bill: Gas and Electricity Explained

Your energy bill explains what you used, how much it cost and how your payments affected your balance. Understanding these three things makes it easier to check charges and compare tariffs. This guide walks through a household gas and electricity statement, with a worked example using illustrative prices.

Check the supply address, account number and dates covered by the statement. The billing period tells you when the energy was used; it is different from the date the bill was issued. A statement covering six weeks will not be directly comparable with one covering a month.

Check whether the statement includes electricity, gas or both. Even with one supplier, the fuels may appear in separate sections or on separate statements. Read each section before assuming the total covers your whole household energy supply.

The usage section normally shows a reading at the beginning and end of the billing period. Look at the dates and whether the readings are actual or estimated. Suppliers use different labels, so check the bill’s key rather than assuming every letter means the same thing.

An estimated reading is the supplier’s calculation of likely usage rather than a reading taken from your meter. Citizens Advice recommends submitting an up-to-date reading if an estimated bill is incorrect. Having a smart meter does not guarantee every bill uses automatic readings: communication problems can still lead to estimates.

A kilowatt hour, written as kWh, measures energy used. It is different from a kilowatt, or kW, which measures power. For example, an appliance drawing a constant 1 kW for one hour uses 1 kWh.

For a straightforward single-rate electricity meter, subtracting the opening reading from the closing reading gives the electricity used in kWh. If the readings increase from 12,000 to 12,240, that is 240 kWh. Multi-rate tariffs may show separate readings and charges for different periods.

Gas is different. Gas meters usually record volume in cubic metres or cubic feet, while bills charge for energy in kWh. Your supplier converts the volume using factors including the gas’s calorific value. Use the converted kWh figure when checking the cost, rather than multiplying the raw gas-meter difference by the unit rate.

The unit rate is the price for each kWh. The standing charge is a daily amount that normally applies even when you use no energy. Gas and electricity have their own rates and standing charges.

Check whether the prices shown include VAT or whether tax is added separately. Do not add VAT again to a VAT-inclusive figure. If prices change during the billing period, the statement may split usage and standing charges into sections with different rates.

Suppose a 30-day statement shows 240 kWh of electricity at 25p per kWh, plus a standing charge of 50p a day. In this example, both prices already include any applicable VAT. These are invented prices for explanation, not a current tariff.

Electricity used: 240 × £0.25 = £60. Standing charge: 30 × £0.50 = £15. Total electricity charges: £75. Gas charges, if applicable, would be calculated separately and added to the account.

The £75 represents the electricity charges for this period. It is not necessarily the amount you need to pay now, because previous credit, outstanding debt, payments and adjustments also affect the account balance.

The opening balance is the credit or debt carried into the period. Payments add money to the account; energy charges use it. Refunds, discounts and corrections can also change the closing balance. Check the words credit and debit, because suppliers do not all display positive and negative amounts in the same way.

For example, starting with £40 credit, paying £100 and receiving £75 of total charges leaves £65 credit, assuming no other adjustments. Credit means money remains on the account; a debit balance generally means charges exceed the money paid in.

A monthly Direct Debit is a payment towards your account, not necessarily the cost of that month’s consumption. Ofgem explains that credit can build during summer and help cover higher winter usage. Read the payment instructions to see whether an amount is due separately or will be collected through your usual arrangement.

Look for your tariff name, payment method and any contract end date or exit fee. Your supplier may also show estimated annual usage and estimated yearly cost. Annual usage is measured in kWh; estimated yearly cost is expressed in pounds.

The yearly cost is a projection, not a guaranteed bill. When comparing offers, use the same annual gas and electricity usage for each quote. Comparing monthly payments alone can hide differences in usage assumptions or account debt.

Check the address and dates, reading types, kWh used, tariff rates, number of standing-charge days and payments received. Then follow the calculation from the opening balance to the closing balance.

If something does not match, contact your supplier with the relevant statement and a current meter reading. Ask which entry needs explaining or correcting. Our guide to high energy bills covers the next steps when the charges or proposed Direct Debit still look wrong.