What Causes Electricity Bill to be High?

What Causes Electricity Bill to be High?

If you’ve had an unexpectedly high electric bill, whether that’s for your business or your home, you’ll know how frustrating it can be. Unfortunately, the energy market can be confusing at times so if you’ve found yourself stumped by a higher-than-normal invoice, you’re not alone. To help demystify your bills, here’s our expert guide on why your charges might be higher than you anticipate.

Consumption

Electricity consumption is measured in kilowatt-hours (kWh). To find out if you are using more electricity, you need to compare the usage in kWh to a previous bill. It’s best if you compare like with like, so it’s a good idea to use one from the same time period in the year. If you have used significantly more kWh in this bill, then your energy consumption has increased. To reduce your bills, make your business more energy efficient. This can include relatively cheap measures such as switching to LED lighting and raising staff awareness. You could also consider fitting occupancy sensors or intelligent heating and air conditioning (HVAC) systems. These measures cost more up-front but are designed to save money in the long term.

 

Rate

If you are using the same kWh of electricity as you did last year, but your bill is significantly more expensive, then the next possible explanation is that there has been an increase in your tariff. Some energy providers lure business customers in with low introductory rates, relying on the fact that you won’t remember to switch before their standard (read: expensive) tariff kicks in. The first things to look at are your standing charge and your unit rate.

  • The standing charge is a daily fee that you pay for the supply of your electricity. You pay this each day regardless of how much energy you use.
  • The unit rate is the amount you pay per kWh of electricity you use.

These rates can vary, and the best deal for your business will depend on the size of your business and what your typical consumption is. Our research has shown that 80 per cent of business customers are overpaying on their energy bills.

Other charges

As well as the tariff that you pay for the electricity you use, your business electricity bill includes other charges. In fact, only 44 per cent of the average business electricity bill is for the electricity supplied. The other 56 per cent is made up of ‘third-party costs’. These include transmission charges and contributions to government schemes. For example, every unit of energy your business uses is subject to a Climate Change Levy (CCL). There are exemptions if your business uses less than 1,000kWh of electricity per month or has a domestic element. These are costs that you can’t necessarily avoid by reducing your consumption, but Utility Bidder’s expert advisors can help find the best deal for your business.

Why is my domestic electric bill really high?

When it comes to your domestic electricity bills, there are a number of reasons why the amount due could be much higher than expected. While you may suspect that you have an electricity leak or even that a neighbour is stealing power, there are usually far more mundane causes of high domestic electricity bills that are typically much more straightforward. As with business electricity costs, high electricity bills in the home are usually caused by three main things:

  • you are actually are consuming more electricity than you thought
  • your electricity rate has increased
  • other factors are affecting your bill, such as faulty equipment or human error

Household consumption

The most common cause of high electricity bills is simply that you have used more power in the home than you thought. This could be due to the season, for example – have you been turning the air conditioning on more during a mini-heat wave or your electric radiators to deal with a cold snap? Alternatively, it could be to do with new appliances you have recently installed, such as power-hungry tumbles dryers or new heating and cooling (HVAC) systems.

To find out if this is the case, you will need to identify which appliances are using the most energy and how much more a month this is costing you. To help with this, why not use Utility Bidder’s interactive Electricity Cost Calculator? Simply find the appliance you want to examine, enter the amount of hours per day it is used and your current unit cost per kWh as supplied by your provider, and this handy tool will instantly calculate and display the kWh used by this appliance each month and what this is costing you. Using this information, you will be able to target the appliances and items that are costing you the most to run and either cut down your usage accordingly or come up with alternative solutions. This could involve switching to LED lighting rather than using conventional light bulbs or using fans rather than air conditioning in the home, for example.

An increased rate

As with business rates, if you believe you are consuming the same kWh of electricity as normal but your bill is significantly increased, it could be that your electricity tariff has risen. This could happen for a number of reasons. For example, if the attractive electricity contract you signed with your provider has now expired and the low introductory rate you have been on for a year has automatically been replaced by a more expensive tariff. Alternatively, your provider may have been charging you based on inaccurate estimates, rather than using regular meter readings to calculate your bill, and now that an accurate reading has been taken, you owe your provider the difference on top of your standard usage.

To avoid falling victim to changing domestic electricity rates that can cost you a lot, ensuring you always keep on top of your contract is essential. Knowing when your low introductory rates end and transfer over to more expensive tariffs can mean you can switch providers and find better deals before being tied in. Additionally, providing regular and accurate meter readings will ensure your rate is based on realistic data and not estimates that might come back to bite you.

Other factors

If your rate hasn’t changed and you believe your consumption has not significantly altered, there are also a number of other variables that can cause high domestic electricity prices. These include faulty meter equipment installed by your provider or incorrect readings submitted, for example. If you suspect either of these things to be true, contact your supplier directly to make a complaint.

Faulty equipment or incorrect use of supposedly energy-efficient energy tools such as solar panels can also conversely lead to a significant increase in your bills. Broken inverters, faulty panels, seasonal shading and water-logged connections to your home solar panels can all lead to reduced or even non-existent functionality, meaning the panels do not help subsidise your electricity charges. If you don’t realise there’s an issue for a prolonged period of time, you might get a nasty shock when your next electricity bill arrives. This is why it pays to understand all your appliances and equipment and keep it well maintained.

So, there you have it – the most common causes of high electricity bills at home and at work. If you’re concerned about increasing electricity bills, whether at your business or your home, why not let Utility Bidder help? We make it quick and easy to find and compare the best energy deals on the market. Give us a go today – we might be able to save you a small fortune.

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