Understanding energy is easier than you may think.
The good news is that the things likely to affect you are amongst the easiest to understand.
It’s important to know a little bit about the industry – after all most of us need energy to power our lives. That’s why we’ve put together this guide for you. Here, you’ll find images and definitions that will help explain all you need to know, in easy-to-understand terms.
Meters - The four different meters you’ll typically find in the UK.
Oldest: Dial Meter
An older style gas or electricity meter that has dials displaying usage.
Newer: Digital Meter
A more modern meter, that displays usage digitally.
Newest: Smart Meter
Smart meters automatically send readings to your supplier, meaning that you don’t have to submit readings yourself. The government has set a target that all homes should have a smart meter by 2020.
Prepayment meters enable consumers to pay for their gas and electricity upfront via coins, tokens, keys or cards.
Cheapest: Direct Debit
- Many tariffs offer a discount if you opt to pay by direct debit.
- A payment option for many tariffs, where an amount is automatically debited from your account on an agreed date, usually on a monthly or quarterly basis.
- If you use less energy than expected, your account will go into credit and you can request a refund from your supplier. If your account reaches a certain level of debit, your supplier might raise your payment.
More Expensive: Paper Billing
- The traditional way of billing – your usage is calculated after it’s done, and you are sent a bill in the post.
- Tend to be a bit more expensive, as suppliers charge for overhead (such as postage and printing).
- You will always know what is expected of you in terms of payment in short order.
Most Expensive: Pre-Payment Meters
- Often installed in properties where the occupant (sometimes the previous occupant) has not been able to obtain a credit meter.
- This could be due to a range of reasons, including financial difficulties.
- Can often to be swapped to credit meters - which often have significantly better tariffs.
Types of Energy
‘Traditional’ fuels such as gas, oil and coal.
Electricity generated from renewable sources, such as wind and solar. Please see World of Renewables for further information and content relating to all things renewables!
Power stations use fuel to generate electricity. Different tariffs use electricity generated from different fuels such as gas, coal, nuclear and renewable. The fuel mix tells you how a supplier’s electricity was generated. This could be from a mix of fuels (e.g. 75% coal, 25% nuclear) or from a single fuel (e.g. 100% renewable).
Fixed versus Variable
- A tariff where the price you pay per unit of gas or electricity is guaranteed to stay the same for a specified period of time.
- You’re protected if prices go up, but be aware that you won’t benefit if prices come down.
- Variable tariffs can go up and down as the energy wholesale market fluctuates.
- If market prices rise, you’ll pay more but equally if they drop, you’ll pay less.
- Many consumers prefer the peace of mind that a fixed tariff brings, but the cheapest tariff on the market is often a variable, so really it comes down to individual preference and being able to predict whether market prices will rise or fall.
Cheapest and Expensive Tariffs
What are the cheapest and the most expensive energy tariffs?
Cheapest: Switching To A Cheap Tariff
- Suppliers look to gain new customers by offering bargain rate tariffs.
- There are thousands of these on the market, so it may be daunting to sift through – unless you use a website like energyhelpline to find the deals that suit you best.
More Expensive: Standard Variable Tariffs
- Standard plans are energy supplier’s default tariffs.
- If you’ve never switched or don’t switch before your current tariff ends, it’s likely that you’ll be on the standard.
- This can be bad news, as they tend to be the most expensive plans.
Still Looking for Definitions
Here are some more, all in plain terms.
This is the person to whom an energy account is registered. Their name will appear on bills.
A unique number identifying your energy account. It is usually shown on the front of your bill.
A bill based on an actual meter reading, from your supplier reading your meter (denoted by an ‘A’ on bills) or your own reading (denoted by ‘C’ for customer). This is as opposed to estimated bills, denoted by an ‘E’.
Alternatives to fossil fuels like gas, oil and coal. They include solar, biofuels and LPG.
Automated Meter Reading (AMR)
Meter readings sent automatically from a smart meter.
The six biggest energy suppliers in the UK: British Gas, EDF Energy, E.ON, Npower, Scottish Power and SSE.
The address where bills are sent. This can be different to the address where the energy was used, usually known as the supply address.
The period of time that you are being billed for, very often a quarter (3 months).
This describes how much heat is generated from a volume of gas, demonstrating the quality of the gas.
Similar to a fixed tariff, this is where the price you pay per unit of gas or electricity is guaranteed not to rise for a specified period of time. This means that you are protected if prices go up and could benefit if prices come down.
Where the same supplier provides your gas and electricity, it’s known as dual fuel. There are usually discounts for having the same supplier for both.
An electricity tariff where you pay less per unit for seven hours during the night.
Similar to Economy 7, this tariff provides 10 hours of cheaper electricity per day.
The amount of energy you use. This is what your gas and electricity meters measure.
The company that supplies gas and electricity to your property and who you pay your bills with.
Where an actual bill cannot be issued – for example if a meter reader can’t gain access to your property or if you haven’t submitted a reading yourself – your usage will be estimated in order to issue a bill. This is denoted by an ‘E’ on bills. Energy suppliers make it very easy to submit your own readings online or via automated telephone services.
The UK’s energy transmission system, operated by the National Grid.
A range of products and materials that will help make your house more energy efficient, by preventing the escape of heat. Popular types include loft insulation, cavity wall insulation, pipe/tank lagging, double glazing and draught excluders.
Kilowatt hour (kWh)
Gas and electricity usage is measured in kilowatt hours (kWh). You’ll see your usage and unit price in kWh on your bill.
Liquefied petroleum gas (LPG)
An alternative to natural gas, often used by properties that aren’t on the main gas network. LPG is kept in a tank at the property.
Meter Point Administration Number (MPAN)
A unique 21-digit number that identifies your electricity meter.
Meter Point Reference Number (MPRN)
A unique number (up to 10 digits long) that identifies your gas meter.
Owner and operator of the UK’s energy transmission system.
The Office of Gas and Electricity Markets (Ofgem) is the UK energy industry’s regulatory body. It promotes competition in the industry, ensuring that consumers have choice and value.
A daily charge that is added onto your usage bill by energy suppliers, to cover costs such as meter reading, energy network connection and maintenance.
This is the address where energy is used and can be different from the billing address, if you have a second property for example.
The industry-wide term used for switching energy suppliers.
The amount you pay for your gas or electricity.
The amount you pay per unit of gas electricity (measured in kilowatt hours).
Value Added Tax (VAT)
A tax added onto products and services by the government. It’s currently 5% on energy prices.