Utility bills
When you buy or rent a property, you will need services such as electricity and gas to be supplied to ensure your lights can be switched on, mobiles phones can be charged and your house can be heated.
Meter readings
Most companies measure the amount of electricity, gas or water used in a home through a meter.
Often people read their own meter and send the reading to the company supplying their electricity or gas. Their bills will show two meter readings - the previous and present meter readings.
If the meter has not been read then the energy company will estimate a reading based on previous usage by the customer.
The difference between the two meter readings shows how much gas or electricity has been used during the period between meter readings. So to work out the cost of your latest bill, you have to subtract the previous meter reading from the present meter reading. When you know your usage, you multiply it with the unit cost.
Remember a standing charge is added to cover extra costs.
Basic example
Megan receives an electricity bill. The details are as follows:
Find the total cost of the electricity including Value-added tax. A government tax added to the cost of most goods and services. As of 2015 the usual rate is 20%, while a reduced rate of 5% is charged on some goods and services, eg home energy. .
Solution
Subtract the previous meter reading from the present meter reading to find the units used.
8,800 – 7,000 = 1,800 units.
Multiply by the cost per unit.
1,800 × 4 = 7,200p.
Don’t forget to change into pounds.
7,200p ÷ 100 = £72.
Add on the service charge.
£72 + £10 = £82.
To find the VAT you have to find 5% of £82.
Calculator
5 ÷ 100 × 82 = £4.10.
Non-Calculator
10% is found by dividing by 10.
£82 ÷ 10 = £8.20.
5% is half of 10%.
£8.20 ÷ 2 = £4.10.
Add on the VAT
£82 + £4.10 = £86.10
Further examples
A young couple living in a two bedroom flat is charged the following for their utility services.
At the beginning and end of the A quarter is three months. There are 12 months in a year, so three months is a quarter of a year., the meter readings for water and electricity were recorded.
Calculate how much money was spent on water and electricity this quarter.
Cost of water
The amount of water used is found by subtracting the previous meter reading from the present meter reading.
7,200 - 6,700 = 500m3.
For every m3 used, you pay 35p.
For 500 m3 you pay 500 × 35 = 17,500p = £175.
The standing charge is £10 per quarter.
So altogether, the cost of water for this period is £185.
Cost of electricity
The amount of electricity used is found by subtracting the previous meter reading from the present meter reading.
9,800 – 8,000 = 1,800 kWh.
For every kWh you use you pay 10p.
1,800 × 10 = 18,000p.
We need all our units to be the same so you have to change pence to pounds by dividing by 100.
To change pounds to pence, you must you must multiply by 100.
18,000p ÷ 100 = £180.
Standing charge for three months is £4 × 3 = £12.
The cost of electricity for this period is £192.
Therefore the total for both water and electricity is found by adding both amounts. £185 + £192 = £377.
Credit and Debit
People often choose to pay their bills by direct debit. This means the money is paid automatically from your account each month. This is then deducted from your bill. Direct debits will show up as credits on your account or CR. If you owe money it will show up as DB, which stands for debit.
Question
Billy has been paying for gas by direct debit each month for January, February and March. He gets a £30 discount for paying by direct debit. His April bill shows the following meter readings and the cost of each unit is 12p.
Complete the table below to find how much he owes.
This means Billy owes £3.10.
