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Understanding your electricity bill better could be a way to quickly save money

Article provided by Absa

The COVID-19 pandemic and the subsequent lockdown has affected all areas of our daily lives – the way we work, the way we manage our finances and how we interact with each other.

In these unprecedented times, many have concerns about the future, their income and are looking at ways to save costs in monthly household budgets. One cost that continues to put pressure on households, is utility tariff increases, and given that most families are home for extended periods, their personal energy use may have increased. Added to this the fact it is winter (there is a usual, seasonal use increase), and costs are being increased to reflect this seasonal peak in demand.

We have outlined a few steps that could help you maintain healthy finances by managing electricity bills, and therefore, your budgets, sensibly.

Reducing your electricity costs might be a quick win in improving your monthly budget

With many households refocusing their budgets due to changing incomes and expenses, there is no better time than now to look at where to cut costs. While you may already have reduced spending on luxury items, as well as those easier-to-manage costs, you may have overlooked your electricity bill, which is a large cost.

Therefore, the big question is: “Do you understand your electricity bill and have you validated this?”  

If not, now is a better time than ever to start unpacking your bills. Below are some tips and advice on a simple process that can be used to verify your electricity statement.

Steps in verifying your electricity bill

Account information

Your account number, service address, where your electricity meter is located, and the meter number are all unique identifiers for your electricity account. Confirm that this information is correct. As silly as it might seem, mistakes such as being charged for your neighbour’s consumption, do happen. This information should also be kept at easy reach as it is usually required as a reference when making a payment or querying a problem on your account.

Typical electricity billing components

Your electricity bill is made up of a number of costs. The utility provider generally bills you in terms of two methods (fixed and variable charges), by which your electricity tariff structure is defined. Some of the jargon used to describe these costs can be rather confusing. Below is some of the key jargon and descriptions that you would find on a typical bill:

TermUnitDescription
Service chargeDays/MonthThe service charge is the cost per day/month that is charged for providing you with electricity (including the associated administration and maintenance).
Active energy chargekWhThe total use measured in kilowatt-hour (kWh), how much electricity you’ve consumed (or an estimate of how much you’ve used) between your previous bill and your current bill.
Network demand chargekVAThis is a charge that is variable on a month-to-month basis and is charged on the actual demand measured in kilo-volt-ampere (kVA). Demand charge is the highest actual kVA recorded over a 30-minute period during the billing period.
Network access chargekVANormally associated with larger electricity consumers. The network access is a tariff component that is fixed and is charged as R/kVA. The kVA is usually agreed on upfront when applying for your electricity connection and is the maximum amount of kVA expected to be supplied by the utility provider.

Tariff structure

Your tariff structure is related to the type of meter (single or three-phase electrical connection), voltage supply, as well as the maximum demand at your premises. This determines the plans or products available and the rates at which you are charged for your electricity use. Reviewing current tariff structures and negotiating with your relevant utility provider to move to the most cost-effective tariff structure where feasible, can be a good cost-saving action. For more information on tariff types and how they are structured, contact your electricity provider or search their website.

Analysing your bill

The simplest method of analysing your bill is by applying this easy formula for each of the items being billed. For example: kWh consumption x Rate = Cost (100kWh x R1.20 = R120.00).  If the meter reader cannot access your meter, you would normally receive an estimated read to calculate your bill. In this case, you will be billed based on a three-monthly consumption average. Pay careful attention and record the period in which the bill was estimated – it will be clearly stated on your bill. The total charge for the month in which your meter is read will be the actual metered amount and a credit will be passed if the previously estimate is higher and vice versa.  

Measure and monitor consumption

Understanding your electricity bill and your energy consumption will help you to assess your energy use patterns and levels, so that you can begin to make changes around the home that can save you money.

The best way to manage your energy use is to measure it. Your electricity bill contains all the necessary information you need to monitor your consumption.

Do some simple comparisons. For example, by comparing your use from the same period in the previous year, you can get a picture of your electricity consumption during the different seasons. If your use is higher in winter or summer, you might want to look at the reasons and some options for reducing it.

Take action at home

Given that we are in winter and your costs are likely higher, you can look at a mix of options to reduce your electricity costs. This might include using thicker bedding so that you don’t need to leave the heating on overnight, heating only the rooms you are using, sealing draughts and cracks with simple window and door tape, and investing in a more energy-efficient heater if your current model is using too much power.

Geysers can sometimes account for up to 40% of electricity consumption and so, installing a timer or a more efficient geysers (gas or solar) can save you a large portion of your electricity bill in the long run. Making some simple changes to the way you use energy in your home, can help you save.

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