Last updated: 23/07/2020 | Estimated Reading Time: 5 minutes
Energy market jargon buster A-Z
Kilowatt hours, Economy 7, standing charging, and an alphabet soup of acronyms. Sometimes reading your energy bill, or simply reviewing your tariff options, can feel like deciphering hieroglyphics.
We've put together this guide to help you wrap your head around it all:
In This Guide:
The language used in the energy market can be opaque and confusing. Maybe that's why Ofgem (more about them later) has found that, as of 2018, 57% of households had never switched energy supplier or had switched only once, although switching can slash more than £300 from their annual bills.
If you're baffled by your energy bills and options you're not alone. In 2018 a YouGov poll found that a third of consumers felt they didn't know enough to select an energy supplier or tariff. 42% of people said they weren't even confident to compare energy prices online. And although Ofgem made energy companies simplify their bills a few years ago, six out of 10 consumers say they are still baffled by them. And if they can't understand the current rates and terms under which they are buying energy, how can they tell whether they're being ripped off, and whether a better energy deal exists elsewhere.
Some money saving experts have even accused energy companies of keeping their lingo and tariffs deliberately confounding and complex, to deter switchers. And consumer advocates like Citizens Advice have devoted themselves to demystifying the energy market and switching process for consumers, offering advice and running events to educate households about energy.
Ultimately the more knowledge you have as a consumer, the more likely you are to identify the best deals and avoid paying over the odds for your energy.
In that spirit, you might find the following glossary of energy market terms helpful as you compare energy:
Jargon buster A-Z
Big Six: the six energy firms which today hold a 75% share of the domestic energy market. These are British Gas (15 million customers), EDF Energy (5.6 million customers), E.ON (4.6 million customers), NPower (6.5 million customers), Scottish Power (5.3 million customers), and SSE (9.1 million customers).
dual fuel tariff: an energy plan that gives you both gas and electricity from the same supplier. You can usually obtain a discount by opting for a dual fuel tariff rather than seeking out two separate suppliers. You'll also benefit from having only one bill.
Economy 7: tariffs that give you discounted electricity for seven nighttime hours. Economy 7 tariffs are ideal if you have electric storage heaters, which draw on electricity at night and then release it as thermal energy during the day. Similarly, rarer Economy 10 tariffs give you discounted electricity for 10 hours, usually during the night but occasionally adding on two or three off-peak daytime hours.
fixed rate energy tariffs: energy deals that give you a locked-in per unit rate for energy for a certain amount of time, no matter what happens to the wider energy market. Fixed rate energy plans typically last for 12, 18, 24, or 36 months, and can protect you from fluctuations in wholesale energy prices-specifically, their recent general upward trend-but the longer you lock in the price, the more you'll pay. You can also incur early cancellation fees if you switch during your fixed term, whether you're seeking out a better deal elsewhere or moving house.
green energy: electricity sourced from renewable resources, such as wind and solar power, as opposed to fossil fuels like gas and coal.
kilowatt hours (kWh): units of gas and electricity, equivalent to the amount of energy-gas or electricity-it would take to run a 1,000 watt (1 kilowatt) appliance or gadget for an hour. You'll see your gas and electricity consumption represented in kilowatt hours on your bill or smart meter.
MPAN: meter point administration number, a unique 21-digit code used to identify electricity supply points. Sometimes also called supply number' or 'S number.'
MPRN: meter point reference number, a unique six- to 10-digit code for your gas supply, which appears on your gas meter. Sometimes also known as an M number.'
Ofgem: the Office of Gas and Electricity Markets, the government regulator for the electricity and gas markets
online tariff: energy tariffs where all your contacts with your supplier, from billing to meter readings, are done online and you won't have bills posted to you.You can earn a discount on there tariffs, and protect the environment by forgoing paper bills.
personal projection: a figure that appears on your energy bill, showing you how much your energy costs will be over the next 12 months if you stick with your current tariff. The estimate is based on our previous energy use.
prepayment tariffs: energy tariffs where you pay for your energy in advance, topping up your meter with a key or smart card. You'll need one of these if your property is fitted with a pre-payment meter. Also called a pay as you go tariff.
renewable energy tariff: a tariff where 100% of your electricity is generated from renewable resources and, often, a portion of the gas supplied is green gas' or biomethane.
smart meter: the next generation gas and electricity meters, wireless enabled and designed for you as the consumer as much as for your supplier. Smart meters automatically relay information about your energy consumption to your supplier, eliminating the need for you to take and send meter readings, and display your consumption-in kilowatt hours and pounds and pence-on a digital display on the meter, on an in-home display, and sometimes on a smartphone app.
standing charge: The rate you pay to your energy supplier, usually assessed per day, that remains the same no matter how much energy you use. The standing charge covers the upkeep of your connection to the mains supply and servicing of your account.
standard variable tariff: an energy deal in which the rate you pay for gas and electricity fluctuates. This is one of the more expensive ways to pay for energy. If you've previously had a fixed rate energy tariff and failed to switch after it expired, you likely will have been reverted to your supplier's standard variable tariff.
tariff comparison rate (TCR): a figure that appears on your energy bill, showing you how much you pay for your tariff per unit of energy, accounting for unit rates, standing charges, and any tariff discounts. A TCR is much like the APR rate on a credit card or other loan, totalling all the costs associated with your energy use. A TCR, rendered in pence per kilowatt hour (p/kWh), can be useful when you compare energy tariffs.