Calculating energy costs

Calculating energy costs

To understand how to calculate energy costs, it is a good idea to start with electricity, then do the additional calculations used for gas.

Electricity

There are four things to consider when you are calculating your electricity costs:

  1. Unit price
  2. Number of units used
  3. Standing charge
  4. VAT

Here is an example of the calculation of electricity costs:

  1. Unit price is 40p per kWh
  2. 700 units were used
  3. The standing charge is 55p per day and the period for the usage is 91 days.
  4. VAT is 5%

0.40 x 700 units = £280

0.55 x 91 days = £50.05

£280 + £50.05 = £330.05

£330.05 x 0.05 = £16.50

Total cost £330.05 + £16.50, which amounts to £346.55

What is a unit price and standing charge?

Gas

You need to consider the same things with gas, but you need to add an extra formula because gas is supplied in cubic metres (m3) and is charged for in Killowatts (kW).

The extra formula is:

Units (m3 or ft3 depending on the meter)

x volume correction factor – this is typically 1.022640

x calorific value – this varies between 37.5 and 43

/ kWh conversion factor – this is always 3.6

Example

Assuming that 200 units have been used (as shown on the meter) and the calorific value is 40…

200 x 1.022640 x 40 / 3.6 = 2,272. This means that 200 units in m3 become 2,272 units in kWh, which is used to calculate the costs.

If gas is delivered in cubic feet (ft3) instead of cubic metres (m3), then you will also need to multiply the above figure by 2.83.

Here is an example of the calculation of gas costs:

  1. 200 units were used
  2. The volume correction factor is 1.022640
  3. The calorific value is 40
  4. The kWh conversion factor is 3.6
  5. The unit price is 10p
  6. The standing charge is 30p per day and the period for the usage is 91 days.
  7. VAT is 5%
Part 1 – the extra formula

200 x 1.022640 x 40 / 3.6 = 2,272

Part 2 – similar calculation style as for electricity

0.10 x 2,272 units = £227.20

0.30 x 91 days = £27.30

£227.20 + £27.30 = £254.50

£254.50 x 0.05 = £12.73

Total cost £254.50 + £12.73, which amounts to £267.23

Please click here for more information about the gas conversion formula.