What do I need to know about utility bills?

Although most of us only glance at our utility bills to see what’s owed, they’re packed with useful information. Here’s a breakdown of your gas and electricity bills, including a look at how this information can save you money.

Young couple reading utility bill

In this guide you'll find answers to questions including:

  • What is a utility bill?

  • What information will I find on my utility bill?

  • Utility bill example: what makes up your charges?

  • How much is an average gas bill per month?

  • Can I use my electric and gas utility bills to save money?

  • What other information will you find on your utility bill?

What is a utility bill?

A utility bill is a statement that shows a breakdown of all the charges incurred as an energy customer. Bills are issued by your energy supplier on a monthly or quarterly basis, depending on how often you make payments. 

The purpose of the bill is to provide payment options, showing how much is owed for the billing period. Although this sounds simple, there are several parts involved which we’ll outline below. 

What information will I find on my utility bill?

Diving into the fine print, you’ll see that your utility bill is broken up into several sections. According to Ofgem regulations, it must provide some basic, standard information about your tariff and energy use. Here are some of the key points you’ll see listed:

Account details Includes the name of the account holder, the billing address, and any other basic identifying details.
Energy tariff You’ll see your current plan listed. This is helpful because it shows you whether you’re on a fixed or variable tariff, who the provider is, and whether there’s an end date to your contract.
Energy use Your household energy use is displayed in kilowatt-hours (kWh). Essentially, you’ll be charged for each kWh used. Those who receive a combined utility bill for gas and electricity will see two sets of figures here, breaking down consumption for each type of fuel.
Billing period Whether you’re billed monthly or quarterly, you’ll see the dates clearly displayed. This should be placed near the amount of energy used for reference. The bill should also show you whether these figures are based on estimates or recent meter readings.
Amount owed This is the part that everyone skips down to first, and it should be clearly displayed on the front page of the bill for easy reference. It’s important to note that the amount owed could be a credit if you’ve overpaid by direct debit. Whether it’s credit or debt, you’ll see where you stand with your account.
Terms and conditions You’ll see a summary of your contract or tariff, including the end date of your contract (if fixed) and any cancellation fees should you decide to switch to a different tariff.

Utility bill example: what makes up your charges?

When you pay your utility bill, you pay a single amount. However, that amount is broken down to cover a variety of different costs. Here’s a typical utility bill breakdown so you can see where your money goes. We’ve used the latest figures provided by Ofgem from August 2020, breaking down the percentages of a typical electricity bill – a gas bill is similar, but wholesale costs are larger (46%), while environmental costs are much smaller (just 2%):

Cost% of billDescription
Wholesale energy34% The cost of the actual electricity that you’ve used.
Network costs22% The cost of delivering electricity and gas into your home. The transmission network will depend on your region. It also covers the cost of getting the energy from point A (the generator) to point B (your house). It pays for maintaining the network of electricity wires and gas pipes throughout.
Operating costs17% Covers your supplier’s costs, which can range from engineer callout services to inbound customer service centres.
Environmental and social obligation23% These fees help pay for more sustainable, low-carbon energy sources. Some examples of environmental schemes include: Community Energy Saving Programme, Feed-in Tariff scheme, Carbon Emissions Reduction Target, and The Renewables Obligation.
VAT5% VAT on electricity and gas is currently capped at 5%, subject to change depending on future government policy.
Miscellaneous2% These costs cover such elements as installing new meters.

How much is an average gas bill per month?

Based on government statistics, in 2019 the average annual gas bill was £610, based on a household consuming 13,600 kWh/year of gas. This translates to around £51/month. 

The average electric bill came to £679/year based on a consumption of 3,600 kWh in 2019 – that translates to an average monthly electric bill of around £56.50.

Can I use my electric and gas utility bills to save money?

Yes, particularly if you haven’t switched energy suppliers or tariff in recent years, as you’ll almost certainly be stuck on your supplier’s standard variable tariff. These are usually the most expensive options, so it’s important to look at your bill carefully to see if cheaper options are available. 

Your utility bill will list the type of tariff you’re currently on, so you can see if it’s a fixed or variable rate. If you do have a fixed tariff, the bill will list the expiration date so you can see clearly when you’re eligible to switch. 

1. Personal Projection

Look at the bill to find the personal projection. This shows the amount that your household is forecasted to spend on energy throughout the next year, based on your past usage and current tariff. This gives you some idea of a figure for comparison. 

2. Tariff Comparison Rate

The bill may also show you a useful figure called the Tariff Comparison Rate (TCR). If you’re familiar with an APR figure given for bank loans, you’ll see that the TCR works in the same way. It makes it easier to compare tariffs because it shows you exactly how much you’re spending per kilowatt hour of gas and electricity. The TCR factors all discounts, taxes and standing charges into this figure for a more accurate comparison. 

Armed with information like the personal projection and TCR, you can then think about switching suppliers. Using an energy price comparison tool, plug in your annual consumption in kilowatt hours as well as any other relevant details about your current tariff. You’ll also need to enter your postcode to see what’s available in your region.

What other information will you find on your utility bill?

UK utility bills also display a series of numbers, which are important to help you identify your account:

Account number

This is simply a number your energy supplier uses to identify the account. If you want to ask questions about your bill or lodge a complaint with the provider, you’ll need this number for reference. 

MPAN number 

There will also be a Meter Point Administration Number (MPAN) which is used to identify your meter. It’s 21 digits in length and might be requested if you want to switch supplier, especially when you move to a new house. 

In addition, look out for the following:

  • Available discounts - suppliers are required to include any details of discounts, premiums or incentives that apply to your tariff. These are usually applied to tariffs where the customer pays by direct debit. 

  • Switching information - energy providers are also required to include a reminder on each bill that customers can switch suppliers. This bit of information will include basic advice regarding how to switch. 

Keep in mind that although this switching information is required, most energy providers won’t push you to do so and if anything will recommend their own cheaper tariffs. It’s always a good idea to use an independent switching service to get a better choice of tariffs to choose from.

Last updated: 10 November 2020