A much easier way to calculate and compare energy costs

byb3

Lets get straight into it. Here are the rates currently on offer by two big companies for my postcode (WA5) (all prices exclusive of VAT which is 5%)

EDF ONLINE TARIFF V5 - GAS:
5.2829p per kwh for first 2680kwh
3.0562p per kwh for the rest

EDF ONLINE TARIFF V5 - ELECTRIC:
11.333p per kwh for the first 900kwh
8.7429p per kwh for the rest

NPOWER - SIGN ONLINE 16 - GAS:
Standing charge: 15.0685p / day
Unit Rate: 3.1930p/kwh

NPOWER - SIGN ONLINE 16 - ELECTRIC:
Standing charge: 15.0685p / day
Unit Rate: 9.7500p/kwh

Confusion usually arises when the prices are split into two tiers, primary and secondary. If we assume that we will use all of the primary rate up, which for the vast majority of cases will be true, then we can do the following:

EDF ONLINE TARIFF V5 - GAS:
Calcualte the difference between the primary rate and secondary rate
A = (Secondary - Primary Rate) = (5.2829 - 3.0562) = 2.2267p
Multiply this difference by the amount of units we must use in the Primary Rate
A * Primary Rate Boundary = 2.2267 * 2,680 = 5967.556 = £59.68 (divide by 100 and round off)
Annual Standing Charge = £59.68
Daily Standing Charge = £59.68 / 365 = 16.35p

EDF ONLINE TARIFF V5 - ELECTRIC:
B = (Secondary - Primary Rate) = 11.3333 - 8.7429 = 2.5904p
B * Primary Rate Boundary = 2.5904 * 900 = 2,331.36 = £23.31 (divide by 100 and round off)
Annual Standing Charge = £23.31
Daily Standing Charge = £23.31 / 365 = 6.39p

So to compare this with the NPOWER tariff (assuming all primary rate is used):

EDF ONLINE TARIFF V5 - GAS:
Standing charge: 16.35p / day
Unit Rate: 3.0562p/kwh

EDF ONLINE TARIFF V5 - ELECTRIC:
Standing charge: 6.39p / day
Unit Rate: 8.7429p/kwh

In essence, the primary and secondary rate is used as a way of hiding the standing charge within the price of the units. I personally find this a much easier and fairer way to compare prices.