Energy Guides

Annual energy statements explained

Thursday 29 July 2010

By Dominic Welling

dominic.welling@consumerchoices.co.uk

From December we’ll all be getting an annual statement from our energy suppliers with information on how to save money.

Customers are to get improved bills – including an annual statement - which will explain exactly how much energy they have used over the year, what it has cost, and (provided they continue with the same tariff) how much they are likely to pay over the next year.

Suppliers will also be required to alert customers to any discounts and to prompt them to switch to a cheaper energy tariff or payment method if one is available.

The new rules have been introduced by energy regulator Ofgem from 1 July, following pressure from consumer groups and the need for more transparency in the energy market.

Sarah Harrison, senior partner of sustainable development at Ofgem, explained: “We want customers to have a much better picture of their energy consumption and how much they are spending.

“Clearer bills and annual statements will put all this information at their fingertips so they can compare energy deals more easily when they are thinking of switching.”

Sample of an annual energy statement:

The statement should clearly display the following information:

• Tariff name: By clearly showing the full name of their current tariff, it will make comparing it with other deals much easier.
• Energy usage: A figure showing how much electricity and or gas a customer has used in the previous 12 months. This helps customers build-up a picture of how much they may have been overspending on energy.
• Forecast for next year: The energy supplier will attempt to calculate what the customer is likely to spend in the year ahead. This is based on the customer’s tariff and how much they have spent over the previous year.

Additionally suppliers will have to provide information on:

• The exact terms of the customer’s existing contract - this should include any relevant exit fees and the exact end date to the contract
• Full details of any premiums or discounts compared with the supplier’s standard monthly direct debit tariff
• A reminder that customers can switch supplier. Sources of independent advice on how to go about it should also be present.

Things to look out for that are not clarified on the statement:

1. Kilowatt hours (kWh) are used to determine how much energy people use. A kilowatt hour is 1,000 watt hours.

   Therefore, you can figure the cost per month for an appliance from its wattage. For example, let's say that all of the light bulbs in your house are 100 watts, and your family has had the lights on for a total of 200 hours last month.

   Multiply the 200 hours by the 100 watts and you have 20,000 watt hours, or 20 kilowatt hours.

   Then multiply the 20 kilowatt hours by the cost per kilowatt hour. If each kilowatt hour costs 24 pence, the lights cost £4.80 for the month.

   Also, just to confuse matters further, providers tend to charge a more expensive rate per kWh up until a certain amount of energy has been used and then the rate becomes cheaper.

2. Independent Gas Transporters (IGTs) are often used by constructors instead of Transco (National Grid) in new build properties as they charge less to fit pipes. If this is the case in your house, you may have to pay £30-£40 more on top of any comparison quote for your energy.

   This is because the gas provider will use both Transco and the IGT to supply gas to your house and therefore must pay both of them - this charge is then passed directly on to you.

   There will be a meter point reference number (MPRN) on your new annual statement, which is unique to your house - if it is 10 digits long and starts with 74 or 75 this means you are supplied by an independent gas transporter and will likely be charged extra.