For the last few years, the cost of energy has been exceptionally volatile.
Things got so bad at one point that the government had to step in to cap bills and provide monetary support so prices came down to (barely) affordable levels. Things are still pricey and unpredictable in 2025, but it’s hard to know if you are paying the right amount for your gas and electricity if you don’t understand your bill.
I must confess, I struggle getting my head around the complexity of my own energy bill, despite having spent the last two decades explaining how things work in newspapers and on TV and the radio! So you are not alone. In this week’s column I will explain how your bill works and cover some common bill errors.
Why might my energy bill be wrong?
When you receive a high energy bill, it’s easy to assume at first that it’s wrong, but this may not always be the case. However, there are lots of things that can go wrong with energy billing and metering, from computer errors to faulty smart meters.
Over 4 million first generation smart meters are estimated to not be transmitting data alone. But before you hit the panic button, let’s troubleshoot a little bit. Common reasons why your energy bill might be seem wrong include:
- Your meter is giving faulty readings.
- You’ve significantly changed your energy consumption.
- Your actual energy usage has been reduced by the credit you’ve built up on your account reducing your bill over winter.
- Your current energy tariff has ended and you’ve ‘defaulted’ on to a standard tariff,
- The business has been relying on estimated readings, but now they have an actual reading, they have ‘back billed’ you for your actual energy consumption.
- Computer billing errors.
Let’s troubleshoot your bill to see what’s causing the problem.
How to read your energy bill
There’s a lot of information on your energy bill, but in simple terms, you are paying three things:
- Unit rates – a set fee for each unit of gas or electricity you use.
- Standing charges – the money you have to pay your supplier in England, Scotland and Wales. This covers maintenance, support schemes and other costs. This is not optional and can apply even if you aren’t using energy.
- Taxes – no way around this one either.
There’s loads more information on your bill too. According to regulatory Ofcom, your bill should contain the following information.
- Policy/supply number
- How much energy you have used during the billing period
- How much energy you used in the previous period
- Information about what tariff you are on
- Information on how to make complaints
- How much money you owe or are in credit by
- Details about any charges, fees or payments made to or from the account
- Information about how those fees, payments and charges are calculated
- A breakdown of how that final amount outstanding or in credit has been worked out.
- The date you need to make payment by – or when it will be debited from your account.
- Details of any future changes to the energy product, tariff or price
- The date any changes are to take place
What is an energy tariff?
An energy tariff is an agreement covering the amount of money you pay for your gas and/or electricity. You get to choose which tariff you go on with your energy supplier. There are usually a number of options, but two main types:
- Fixed – where you pay a set agreed rate for the full term of your contract.
- Standard variable – where your rate fluctuates depending on the price of energy at any given time.
In the past, a fixed rate was for more cautious people who didn’t want to risk their energy bill suddenly rocketing, while a good variable rate tariff meant you could take advantage of dropping prices over the year. However, the energy crisis led to massive price increases for energy, which left bills unaffordable for many people.
Bills are still much higher than they were five years ago, but they are a little more stable now. So many people are fixing their bills for the next year to ensure that they don’t pay any more money. However, this means they are locked in to contracts that will cost them up to £100 to ‘exit’ early.
Common misunderstandings and confusing things about your bill
Sometimes your bill might seem wrong, but there are reasons why it might be high when you’ve checked it. Try to avoid looking at your bill on your phone. The screen is far too small to fully absorb the charges. Email it to yourself and get it up on a bigger screen so you can have a proper look.
You can request paper bills if you need them or require them due to your personal circumstances, though the energy company can charge you for additional copies. Common misunderstandings include:
Quarterly bills versus monthly direct debits
Many energy suppliers bill you quarterly, but most of us pay our bills by direct debit monthly. That means that you’ll see a big credit balance when you log on to your online energy account at certain times over three months. That will suddenly reduce dramatically when the billing period approaches.
It’s easy to assume that something major has gone wrong. Ask the energy company for your latest bill, then add up the direct debit payments and any credit balance you had at the start of the period. Now compare that to the energy you have used. If this tallies up, then the amount you’ve been charged is correct.
Estimates
Energy companies still rely on estimated readings millions of times when working out bills. Even if you have a smart meter, it might not be not transmitting properly, resulting in an estimate. Alternatively an energy company’s computer system can assume something is wrong and default you to an estimated reading. This can be particularly frustrating if you’ve given a reading to the energy firm but the computer system thinks it’s incorrect.
Look for an ‘E’ or ‘estimate’ on your bill to identify if the reading has been calculated by the business. These readings can be miles off sometimes so bear in mind that when you give an accurate reading, your bill can go up or down significantly.
Price increases and reductions due to payments by the government
Over the last two years, the government introduced a number of measures that aimed to reduce bills from the stratospheric levels they had reached during the peak of the energy crisis. Some of these payments were phased over a period of time, which significantly reduced your bills.
This support has all ended now, which means your current winter bill might have increased dramatically. In order to establish if there is a problem, gather up your bills from the last few years and look at the actual energy consumption. This is the number of energy UNITS you have used for gas and electricity over comparable periods. If your energy unit consumption hasn’t changed, then the bill is likely to be correct. But if it has increased despite you not doing anything different in your home, you can complain.
Billing errors
Energy bills can seem complicated, so it’s hard to know if they are right or not. But here are a few pointers. If you haven’t changed the amount of energy you use, look for an increase in the number of units of energy you’ve supposedly used compared to previous periods. I’d suggest going through your last two years-worth of bills.
Work out roughly how much you’re using on average for each billing period. If there’s been an inexplicable increase, you have a valid complaint. You can also ask your energy provider to clarify in plain English why things have changed. Ask questions like:
- Why is my energy usage is higher?
- Are relying on estimated readings?
- Are you billing you for energy used over a year ago?
- Have I been put on to a more expensive tariff?
Once you’ve narrowed down what the potential problem is, you can take action.
Back billing
If your energy company sends you a new bill that covers a period that goes back further than 12 months, it’s wrong. Energy suppliers should not charge you for energy consumption that is older than a year if they didn’t bill you correctly at the time.
This is known as ‘back billing’ and is explicitly forbidden by regulator Ofgem. Sadly, I’ve seen far too many bills that break the rules. However, if you have an existing debt that you were correctly billed for at the time, the energy firm can pursue it for up to six years.
Energy meter errors
Smart meter problems are the second biggest area of complaint after billing disputes. Problems can arise from technical problems with the meter or the data not being transmitted correctly. It’s also just been found that there is a ‘north/south divide’ in how meters transmit data that means if you live north of a line between Liverpool and Hull, there may be some problems.
In addition, some smart meters seem to have been fitted incorrectly and are charging people far more for energy than they should be billed. To resolve the problem you will usually be asked to take meter readings every day for around a week to assess the problem. I’d recommend photographing your meter readings so you can prove they are correct.
The energy firm is obliged to identify and correct the situation with the meter. This could involve sending out an engineer to assess the meter’s performance. Even then, the readings might not make sense. So make a formal complaint and ask the firm to spell out their investigation and proposals in writing.
Complaints and the Energy Ombudsman
Energy businesses are obliged to address all complaints in writing unless you agree otherwise. Their ‘final response’ should set out what they’ve done to resolve your complaint and any compensation that they might be offering. This should also tell you about your right to go to the Energy Ombudsman. The Energy Ombudsman is a completely unbiased, free service and it’s really easy to make a complaint online.
- Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist
