How gas and electricity bills are calculated

Updated on 02 December 2014

Wondering how energy companies work out how much you owe them? Here's a breakdown of a typical bill.

Working out your gas usage

On a simple level, gas and electricity consumption is measured in kilowatt hours. However, with gas to get to that measurement requires some calculation.

Many gas meters record gas usage in either hundreds of cubic feet (the old imperial way, indicated by either the words ‘cubic feet’ or ‘Ft’ on the meter) or cubic meters (shown by the words cubic metres or the letter M on the meter).

The calculation into kilowatt hours then differs slightly depending on whether it’s cubic feet or metres.

For cubic feet it’s: The number of units you've used x The metric conversion factor (2.83; this gives the amount used in cubic metres) x The volume conversion factor (the differences in temperature and pressure; always 1.02264) x The calorific value of the gas (the heat generated by the gas; this is shown on your bill) divided by 3.6 = kilowatt hours.

And for cubic metres it’s: The number of units you’ve used x The volume conversion factor x The calorific value divided by 3.6 = kilowatt hours.

If the number of kilowatt hours on your bill doesn’t match the amount you’ve calculated, then you should contact your energy supplier.

The kilowatt hours are then multiplied by your unit price and that’s your gas charge.

Working out your electricity usage

Your electricity usage is a simple kilowatt hours calculation, based on how much you’ve used since the last meter reading.

Again the kilowatt hours are then multiplied by your unit charge.

If you’re on an Economy 7 or Economy 10 tariff then your usage will be charged at different rates, reflecting the fact that the charges vary according to different hours of the day.

Other charges and discounts

If your tariff has standing charges – the fixed costs charged by the energy company – these should also be shown.

There’s good old VAT too – charged on energy at 5%.

You may receive a variety of discounts, for instance for paying by direct debit or for not receiving paper bills. These should also be shown on your bill.

See if you can save by switching your energy supplier

More on gas and electricity

How to switch energy supplier

Ten ways to save on energy

Common problems with energy companies

Standing charges: what does your energy supplier charge?


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