A Jargon-Busting Guide to Energy Terminology
Types of Energy
Renewable energy is energy that is derived from sources that will not run out. Unlike fossil fuels, which are a finite resource, renewable energy comes from sources that naturally replenish themselves, like sunlight, wind and water.
Green energy is another term used to describe eco-friendly, renewable energy. This is energy that comes from a clean source and can include biofuels, hydro power, solar energy and wind energy.
Biomass is a type of renewable fuel that is more and more frequently being used to generate electricity. Biomass is plant material that is burned to generate heat or power. In addition to sourcing an energy supply that comes from biomass, you can also buy biomass boilers and stoves for your home.
Hydro energy is energy that comes from running water. The energy is usually taken from the water using hydroelectric dams. The water flowing through the dams turns turbines, which in turn power a generator and generate electricity.
Wind energy is energy that comes from the wind. It is likely that you have seen the large turbines that are becoming a more frequent sight across the UK. When the wind blows, the turbines turn and electricity is generated.
Jargon on Your Bill
Standard plans are the default energy plants that are offered by energy suppliers. In other words, these are the plans that you will be signed on to if you have not signed up for another type of gas and electricity plan. If you are on a standard plan, you are likely paying more than you need to for your fuels, since these tend to be the most expensive plans. It could be time to compare and switch with Money Pug to find out how much you could save.
Fixed Rate Plan
With a fixed rate plan, the amount you pay for each unit of energy that you use is fixed for a certain length of time. You will usually be tied into the deal and will often have to pay a fee to switch if you want to leave before the end of the fixed rate period. However, you will be protected if gas and electricity prices go up.
When energy companies offer capped plans, this means that the amount the consumer pays for each unit of energy will not rise for a set period of time. But it may go down if the electricity prices should fall while you are on the plan.
Online plans are energy deals that are mostly managed online, on the Internet. You can opt to save on administrative costs and can sometimes get a cheaper deal if you agree to check your bills online rather than receiving paper bills through the door.
If you run a business, you will need a gas and electricity plan that is specifically designed for businesses. Commercial use of energy differs from domestic use in regular homes, and is usually higher. Searching and comparing business plans will help companies get the best deals.
Energy companies are obliged to offer social plans for their most vulnerable customers. They must be equal to their cheapest energy deal. You may be eligible for a social plan if more than 10% of your income goes on fuel.
With a dual fuel energy deal, you will get both gas and electricity from the same supplier. A duel fuel deal is easier to manage, since you will only get one set of bills, and is also usually cheaper than obtaining separate deals for your gas and electricity from two separate suppliers.
This is when you get only gas, or only electricity from a supplier. If you need both gas and electricity in your home, opting for two separate deals is usually more expensive. But it is always a good idea to check to make sure.
This is a type of energy plan that allows you to get cheaper electricity costs during the night. As a general rule, if you use more than 20% of the energy you use at night, you can save money on an Economy 7 plan. So if you think this might be you, compare economy 7 deals with Money Pug to see how much you might be able to save.
The standing charge is a fixed charge added to your bill by the energy supplier for every day that you are connected to the gas and electricity network. If you go for a deal marked nil service charge, or no standing charge, then you will not pay a fixed daily charge. However, it is worth noting that energy companies who have no standing charge may charge more per unit of gas or electricity that you use, so may work out more expensive over all.
If you have a prepayment meter, this means that you will pay for your energy supply as and when you use it. These can sometimes help with budgeting. But research has shown that they can often work out more expensive than low-cost online plans for gas and electricity.
Energy suppliers (especially those who do not have a standing charge) sometimes use tier-based billing systems. This means that you are charged one price for using gas and/or electricity up to a certain amount, and then a different price if you go over that amount. The second tier costs are generally lower.
Energy companies will generally estimate your monthly energy consumption based on what you have used in the past, or based on standard usage. You will pay for estimated consumption each month or each quarter. You can find out how much gas and electricity you have actually used when your meter is read, or you provide a reading. If you have used more than was estimated, you will have to pay the difference.
Kilowatt Hour (kWh)
The kilowatt hour is the unit of measurement for electricity. One kWh is 1 kilowatt of electricity used over 1 hour. If you use a 1000 watt appliance for one hour, you will have used one unit of electricity.
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