Energy > Guides

Energy suppliers’ jargon buster

Robin Bowman

Robin Bowman
Oct 13, 2016

Navigating your way through the jargon that’s used by energy suppliers can be very confusing.

But, unless you understand what terms mean, you can hardly expect to understand your bill.

Here’s a look at, and an explanation of, some of the commonest terms.

 

Actual reading (A)

There is an important difference between an estimated reading and an actual reading, one that has been read and recorded. It will often be recorded as a ‘customer reading’ to indicate that it’s not be entirely trusted!

If the company sends someone to read your meter, that is a definitive reading.Your own, usually sent in through your online account, is the next best thing.

Your bill will show which a reading is.

 

Best Buy

This is the tariff considered to be the best available, based on average usage over a full year.

When you get the results, you may need to enter a few more specific details about your particular circumstances to be sure of the best deal.

 

CAC

This stands for cash and cheque and means that you pay when you get a bill – as opposed to paying a set amount every month based on the use forecast over the year.

The advantage of the monthly payments is that it spreads your costs more evenly.

 

CV

This stands for Calorific Value and is the way of describing the heat generated from each volume of gas. Calorie is a measurement of heat ( same for food). The CV will be shown on your bill.

 

Cancellation fees

Lots of fixed-price tariffs offer you a set price for a set term in exchange for you committing to stay with the company. If you leave, you’ll have to pay an exit, or cancellation fee.

If you’re on a fixed tariff with a cancellation fee, you’ll need to factor it in when shopping around for a better deal – will you save money even after you’ve paid the fee?

Find out by using our free energy comparison tool.

 

Capped tariff

This is one kind of fixed tariff – the price isn’t fixed completely, but it won’t go above a certain level if prices rise during the term of the contract. Prices can fall, but they can’t go up beyond the cap.

 The confusing terms on energy bills and statements can feel suffocating

 

Consumption

Not what you eat, but the energy you use. There are various ways this can be expressed, but the commonest and the most useful to know is the number of kilowatt hours, expressed as KWh or kWh, you use in a year.

You can get this from you bill or energy provider and it’s very useful to quote it when you use a comparison site, that way you get an accurate comparison.

Find out what it is and make a note of it.

 

Cooling-off period

Very important.

If you sign up to agreements online, you almost always get a cooling off period, during which time you are legally entitled to change your mind and cancel, no explanation needed. 

With energy-provider agreements, signed online, it will be 14 days.

 

Discounts

The meaning is obvious … but, there are lots of different kinds and it’s worth checking what you may be able to get to reduce your energy bill. 

The tariff will be the biggie that should lead you to decide which supplier to choose, but nearly all suppliers will offer discounts for such things as opting for paperless billing, paying by direct debit (they like to be sure they’re going to get your money and they like it spread over the year), or there might be a discount if you opt to receive both gas and electricity from the same supplier.

 

Dual Fuel

Companies offer Dual Fuel plans for customers who have both their gas and electricity from supplied by them.

Plans usually have a discounts or other incentive.

 

Economy 7

These are meters that split the tariff of an electricity supply between (typically) seven hours overnight and the daytime.

The rate at night is cheaper. These can be economical for people who use storage heaters, but the daytime tariff is usually much higher than normal rates.

 

Economy 10

The Economy 10 meter records tariffs split between normal use and 10 specific off-peak hours of usage.

This is typically three hours in the afternoon, two in the evening and five overnight.

 

Estimated reading

This is a meter reading based on previous usage rather than actual usage.

The result could be more than you actually used or less. It’s fine to rely on an estimate once in a while because an actual reading another time will correct any anomaly. But if you never supply actual readings, your bills will eventually become far out of line with the energy you actually use.

 

Energy

This refers to both gas and electricity.  

 

Energy efficiency

This is used to refer to using energy in the most economical way – simple actions such as switching lights off in an unoccupied room can build up considerable savings over time.

Most energy companies now place great stress on energy efficiency because the less we use, the less the environment is harmed in its production.

 

Exit fee

Some tariffs will have a fee that’s payable if you leave the deal before it comes to an end.

 

Fixed monthly Direct Debit

This is the way energy companies like you to pay as it guarantees their money on time.

The money is taken automatically from a bank account. Companies must review what you pay according to your usage at least once a year to prevent a large over or under payment.

You’ll usually get a discount if you pay this way.

 

Fixed rate tariffs

This means the price paid per unit of energy is fixed for a specific time. When that period ends, you will go onto a variable tariff, usually one of the most expensive ways to pay.

That’s why it’s vital to shop around when the fix comes to an end.

Fixes are popular when the price of energy is rising but if it’s falling, you are pegged in to a higher cost.

A company's fuel mix tells you how renewable its energy is

 

Fuel mix

This is the mix that the company uses to produce the energy you receive. All companies are now required to publish a breakdown, which will typically show what percentage is used of coal, oil, nuclear, renewable and other.

 

Green Tariff

An extra charge placed on a tariff that is used towards environmental protection. This is a tariff you can opt for.

 

High user

You’re defined as a High User by Ofgem if you use 4,950 KWh of electricity and 28,0000 KWh of gas.

 

KWh (kilowatt hour)

The unit of measurement for gas and electricity use. The number of KWh used is shown on a bill and you’re charges according to the price of each unit.

Knowing how many KWhs you use a year is  very useful when using comparison tools.

 

Low user

Ofgem says you’re a low user is you go under 1,650 KWh of electricity a year, and/or 10,000 KWh of gas.

 

Medium user

You use 3,300 KWh of electricity a year, and/or 20,500 KWh of gas. This is the same as an ‘average user.’

 

MPAN (Meter Point Administration Number)

This is the unique number that identifies your electricity meter to energy companies.

Better than an address for their purposes, this is the actual meter they are passing your supply through. It’s also known as a Supply Number, sometimes an ‘S’ number.

It can be seen on your electricity bill and also on the meter and it’s worth checking the two are the same.

It’s a 21-digit number.

 

MPRN (Meter Point Reference Number)

This is the same as an MPAN, above, but for your gas meter.

It’s a 10-digit number and it’s usually called an ‘M” number.

The National Grid manages the UK's energy supply

 

National Grid

This is the company that looks after the network that moves energy around the country.

 

NSC (No standing charge)

Some energy prices include a standing charge which is a fee you pay every day before you even start using any energy. A NSC price is a tariff without this charge.

 

Ofgem (Office of Gas & Electricity Markets)

The regulatory body for the energy industry.

It enforces rules and handles complaints from the public that can’t be resolved by companies.

 

Off-mains discount

If you don’t use any gas you can’t get a ‘dual fuel’ discount, so to even things out, a number of suppliers give tiny discounts to make up for this.

 

Online tariff

These are usually highly competitive tariffs as they are managed entirely online. Energy companies keep their costs down in this way and so can offer cheaper prices.

You can compare online-only tariffs using A Spokesman Said’s free tool.

 

Pay on receipt of bill

This is when you settle a bill by cash or more likely cheque or card when you receive it.

Energy companies prefer direct debits because you can’t delay them or forget to pay, so you’ll generally have to pay extra to pay on receipt of bill.

 

Pay in advance

Some companies offer the opportunity of customers paying for the whole year ahead, the price based on projected use

You’ll get a discount for handing over all this money ahead of time, but of course, if there’s a discrepancy between what you use and what you’ve paid, you’ll either get a rebate or have to pay more at the end of the pre-paid period.

 

Prepayment meter

Often the most expensive way to pay for energy, the prepayment meter is what it suggests – you have to top up a key or smart card with cash, insert it into the meter to use energy.

This is instead of companies effectively extending credit to you and letting you settle after you’ve used their energy.

Prepayment meters are used in the same way as pay-as-you-go phone.

Most users either have a poor credit history or none at all, or are renting a property with a prepayment meter already in place – some landlords like them as they prevent tenants running up big unpaid energy bills.

 

QDD (Quarterly Direct Debit)

Exactly the same as a monthly direct debit except that payment is made every quarter.

 

Quarterly bills

The majority of energy companies will send a statement showing your usage every quarter, whatever way you pay.

 

Single fuel

Used when talking about either gas or electricity on its own, rather than ‘dual fuel’.

 

Single rate meter

The commonest kind of meter, it records the amount of KWhs used with no distinction between night and day use.

 

Smart meter

These are being slowly rolled out to every home in the country and will do away with the need to provide meter readings all together because they send usage details automatically to your supplier.

This does away with estimated readings and makes bills 100% accurate.

 

Social tariff

A special cheap tariff for people who are defined as in ‘fuel poverty’, which means they spend more than 10% of their income on fuel.

 

Special needs priority

Certain groups of people who are considered vulnerable or have special needs need to be given priority in being re-supplied if power is cut for any reason.

 

Standard tariff

This is the supplier’s bog-standard tariff and are almost always the company’s most expensive. if you are paying a standard tariff, you’re paying too much, period.

 

Standing Charge

A fixed daily charge for your supply, payable before you actually use any energy.

 

Switch

This is what you should be doing every time your fixed deal comes to an end. It’s simply switching supplier and these days carrying out a switch is ultra easy – the Government wants consumers to check for the best deals and so energy suppliers are required to make the process as seamless as possible.

Switching can also mean just changing tariff rather than supplier.

Neither involves any disruption of supply to your home.

Give it a go on our free tool.

 

Tariff

This is the name of the deal you’re on and will set the price per unit of gas and/or electricity that you pay. Same as a mobile phone package.

 

Tiers

Some suppliers use tiers whereby they charge one rate up to a certain amount of usage and then switch to another for higher usage.

 

Tracker tariff

This is a price that stay or ‘tracks’ below a specific rate, which is often the supplier’s standard tariff.

The price you pay is guaranteed to be a certain level below this.

 

Unit rate

The price you pay per unit of energy, which is expressed in KWh.

You may be charged just one rate for all the units you use or a different rate for units above a certain amount.

 

Variable Direct Debit

A fixed direct debit is what it says, fixed. Your payments are spread evenly over the year.

A variable direct debit means that you will pay each month or quarter according to how much energy you have actually used.

The advantage of the fixed direct debit is that you avoid paying much larger bills at times of heaviest use, which for most people is during the winter.

 

Volume correction factor

This is a number, or factor, used by suppliers to do the maths to calculate the number of kWh you’ve used.

Have we missed any tricky pieces of energy jargon? Let us know in the comments section below. 

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