Understanding your energy bill

Many people don’t bother reading their utility bills, but reading and understanding bills is really important if you want to take control of your finances. This handy guide provides an energy bill breakdown which can help you get started….

Energy bills

Unfortunately, bills are a fact of life, and energy is a household essential, so getting a handle on how your charged for your it is really important. So what do you need to know?

If you’re on a typical energy plan, you’ll be billed every two months and - depending on whether you’re signed up to online billing or not - you’ll either receive this bill in the post or online.

First things first, when you receive your bill, you should open it straight away, and make sure you look at all of the various elements of your bill, not just the total amount due. Our explanations below can help you understand each different part of your bill.

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Your energy use

Your energy usage is measured in kilowatt-hours (kWhs) - each kWh you use is called a unit and the amount of units you’ve used in the billing period will be shown as ‘consumption’ or ‘usage’ on your bill.

What you are charged per unit will depend on the tariff you are on, but basically the unit rate you see on your energy bills is the cost you pay per kWh you use.

The best way to cut down on your energy bills is to switch to a new supplier - the average dual fuel customer can currently save up to €359 by switching from standard tariffs to the cheapest deals on the market. However, you can also make significant savings by taking energy-saving measures at home to reduce your energy usage/consumption.

Electricity bill breakdown

There are a number of components that make up the amount you’re charged on your electricity bill, such as Standing Charge and PSO Levy - understanding what each of these elements is will really help you get to grips with your bill.

Next time you receive a bill, open it up and review each charge individually. You should also check to see if there has been a discount applied to your bill - if not, the chances are you’ve reverted to a standard tariff and could make huge savings by switching to a new electricity supplier.

Meanwhile, if there’s an ‘E’ beside your consumption/usage, this means your usage has been estimated and you should submit an electricity meter reading as soon as possible to make sure you’re only charged for what you’ve actually used.

You can do this through your supplier by phone, text, email or online, as well as online on the ESB Networks website.

Gas bill breakdown

If you have gas as well as electricity, you’ll notice that much of the terminology on your gas bill will be the same, such as:

  • Unit rate, which is the rate you pay per kilowatt-hour (kWh) of gas you use.
  • Consumption/usage, which is the amount of kWh units you used during the billing period.
  • Standing charge, which is a fixed annual charge, no matter how much gas you use - the charge will depend on your tariff type and supplier, and it is prorated by the number of days that your bill covers.
  • VAT, which is charged at 13.5% on top of your total bill amount.

However, there are also a couple of different elements on your gas bill, as follows:

  • Carbon tax, which is charged on all gas bills - the charge is linked to your consumption/usage, so you’ll see the carbon tax rate on your bill as 0.370 cent/kWh.
  • Conversion factor, which is a measurement energy suppliers use to convert your gas usage into kWh.

Once again, when you read your bill, check to see if any discount has been applied. If not, see how much you can save by switching.

Also, if there is an ‘E’ beside ‘consumption’ or ‘usage’ - which indicates your bill was estimated - you should submit a gas meter reading as soon as possible. As with electricity, you can do this by phone, text, email or online with your gas supplier. You can also submit a reading directly on the Gas Networks Ireland website.

Dual fuel breakdown

If you are a dual fuel customer, your charges will still be worked out on a per-fuel basis, and you’ll still get bills which have the elements for gas and electricity outlined separately, so you can clearly see the consumption and charges for each fuel.

The elements on these bills will be the same as they would be if you had single fuels, so the information above will be helpful when reading these bills.

VAT on your energy bills

There are a couple of charges on your energy bills which you have no control over, and the one most people are surprised by is the addition of VAT onto the end of your bill.

Your bill is worked out by multiplying the unit rate by your consumption, then adding on the standing charge, and the PSO Levy or Carbon Tax, depending on whether you’ve got electricity or gas.

After that, VAT is applied at 13.5 per cent on the total, so you pay VAT on every element of your bill.

Other fees to think about

Despite what you may think, energy bills are actually pretty straightforward, and - in general - the fees and charges outlined above really are the only ones you need to think about.

However, do bear in mind that all suppliers do charge early exit fees if you want to cancel before your minimum term - usually 12 months - is up. These charges are pretty standard across the energy market, with most suppliers charging €50 per fuel if you cancel early.

What to do if your gas or electricity bills are too high

If you think your energy bills are too high and you haven’t switched in a year or more, the first thing you should do is compare deals and make a switch to a discounted deal. It only takes a few minutes and, depending on your consumption, could save you hundreds of euro.

Once you’ve switched, the best way to save on your energy bills is to cut down on your consumption - our energy-saving tips can help you get started.

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