Using the Tariff Comparison Rate (TCR) to check bill accuracy

[Deleted User]

The Tariff Comparison Rate is or should be appearing on energy bills and is a really easy way to check the accuracy of your bill as well as providing a level playing field when switching energy supplier.

Each energy company provides a TCR price per kilowatt hour for gas and/or electricity with the same calculation used for both fuels. The calculation uses the price per kWh, standing charge and VAT, it doesn't or shouldn't take into account any discounts given unless they have already been incorporated into the tariff and/or standing charge.

My daughter is with British Gas on their dual fuel Standard Tariff so I'm going use figures from her bill to calculate both TCRs.

Electricity: £0.132195 per kWh
Charge: £0.26 per day

Gas: £ 0.048720 per kWh
Charge: £0.26 per day

(AE) Annual Electricity Used = 3200 kWh
(AG) Annual Gas Used = 13,500 kWh

VAT must first be removed. The VAT fraction for 5% is 1/21.

(NE) Electricity = £0.132195 – (£0.132195/21) = £0.1259
(NG) Gas = £ 0.048720 – (£ 0.048720/21) = £0.0464
(NC) Charge = £0.26 – (£0.26/21) = £0.2476

eTCR = (((NE x AE) + (NC x 365) ) / AE) x (1 + 5%)
eTCR = (((0 .1259x 3200) + (0.2476x 365) ) / 3200) x (1 + 0.05)
eTCR = 16.18 pence per kWh

gTCR = (((0.0464x 13,500) + (0.2476x 365) ) / 13,500) x (1 + 0.05)
gTCR = 5.57 pence per kWh

Gas and electric bills arrive.
Gas used 290.99 kWh
Electric used 43kWh

Gas bill check: 290.99 x 0.557 = £16.21 but the bill says £15.46
Electric bill check: 43 x 0.1618 = £6.96 but bill says £6.97
The bill gTCR is stated as 5.52p per kWh
The bill eTCR is stated as 15.95p per kWh

Anyone. Why are British Gas TCR values apparently off the mark?

molerat

The TCR is only of any use over a whole year and is for comparing tariffs not calculating bills. Due to seasonal variations in use the daily charge is a variable proportion of the bill so throws the calculation out.

[Deleted User]

molerat wrote: »

The TCR is only of any use over a whole year and is for comparing tariffs not calculating bills. Due to seasonal variations in use the daily charge is a variable proportion of the bill so throws the calculation out.

Spot on! Apologies. The first para should read:

"The Tariff Comparison Rate is or should be appearing on energy bills providing a level playing field when switching energy supplier." And remove:

"Gas used 290.99 kWh
Electric used 43kWh

Gas bill check: 290.99 x 0.557 = £16.21 but the bill says £15.46
Electric bill check: 43 x 0.1618 = £6.96 but bill says £6.97"

Can someone please change this as I got back too late to edit?

joncombe

[Deleted User] wrote:

The Tariff Comparison Rate is or should be appearing on energy bills and is a really easy way to check the accuracy of your bill as well as providing a level playing field when switching energy supplier.

Each energy company provides a TCR price per kilowatt hour for gas and/or electricity with the same calculation used for both fuels. The calculation uses the price per kWh, standing charge and VAT, it doesn't or shouldn't take into account any discounts given unless they have already been incorporated into the tariff and/or standing charge.

My daughter is with British Gas on their dual fuel Standard Tariff so I'm going use figures from her bill to calculate both TCRs.

Electricity: £0.132195 per kWh
Charge: £0.26 per day

Gas: £ 0.048720 per kWh
Charge: £0.26 per day

(AE) Annual Electricity Used = 3200 kWh
(AG) Annual Gas Used = 13,500 kWh

VAT must first be removed. The VAT fraction for 5% is 1/21.

(NE) Electricity = £0.132195 – (£0.132195/21) = £0.1259
(NG) Gas = £ 0.048720 – (£ 0.048720/21) = £0.0464
(NC) Charge = £0.26 – (£0.26/21) = £0.2476

eTCR = (((NE x AE) + (NC x 365) ) / AE) x (1 + 5%)
eTCR = (((0 .1259x 3200) + (0.2476x 365) ) / 3200) x (1 + 0.05)
eTCR = 16.18 pence per kWh

gTCR = (((0.0464x 13,500) + (0.2476x 365) ) / 13,500) x (1 + 0.05)
gTCR = 5.57 pence per kWh

Gas and electric bills arrive.
Gas used 290.99 kWh
Electric used 43kWh

Gas bill check: 290.99 x 0.557 = £16.21 but the bill says £15.46
Electric bill check: 43 x 0.1618 = £6.96 but bill says £6.97
The bill gTCR is stated as 5.52p per kWh
The bill eTCR is stated as 15.95p per kWh

Anyone. Why are British Gas TCR values apparently off the mark?

The TCR is a fudge to try to work around the fact that OFGEMs fiddling with the market means it is still not easy to compare tariffs. In general a tariff with a high standing charge and a low unit rate is better for high users. A tariff with a lower standing charge and a higher unit rate is better for low users. However the problem is with a fixed daily charge and a unit rate to compare it's impossible to tell someone exactly how much it will cost without knowing exact daily usage.

So the TCR is based on some sort of average usage figures I think, to try to make it eaiser to compare tariffs. Hence some people will find it an over-estimate and some an under-estimate.

The simplest of course would be if all tariffs were simply a unit price and nothing more (I.E. no standing charge), then the TCR would not be needed and you could easily directly compare tariffs. But thanks to OFGEM, we don't have that.

CashStrapped

I always assumed that the PCR (personal comparison rate) was/is more accurate than the TCR when comparing tariffs, as it is based on your usage.

I only use them as a rough indication and double check any comparison results myself.

JJ_Egan

Never found TCR any use at all .
Looks like a method to make tariffs more easily understood for those that don't understand .

Bark01

The OP is nearly completely wrong about this
1) The TCR is only calculated at typical consumption, you can’t use your own consumption and back work it.

2) It will not show you what tariff is cheaper for you unless you use typical consumption – it’s a comparison based on a line in the sand

3) The TCR include discounts, Payment type discounts are factored into the unit rates or standing charges but 2 other discounts are allowed
a. Dual Fuel discount - must be a flat £’s per year value and for the purpose of a TCR must be split equally between fuels
b. Online/Paperless discount - must be a flat £’s per year value

[Deleted User]

joncombe wrote: »

The TCR is a fudge

When switching suppliers each will give an official TCR based on a medium energy consumption which for gas is 13,500 kWh. However it's not unknown for the supplier to provide at some point during the year personal TCRs for projected consumption.

How does all this relate to the amount you pay? This is the easy bit. Using the British Gas official TCR of 5.57p (£0.05575) calculated above multiply this by 13,500 to arrive at an annual cost of £751.95

For electricity multiply the official TCR of 16.18p (£0.161851) by 3200kWh to arrive at £517.92. The total cost of energy on an annual basis is £751.95 + £517.92 which is equal to £1269.87

For the personal TCR substitute 13, 500kWh and 3,200kWh for the actual figures you wish to use. The same calculation applies.

The official gas TCR is fudged in a way that the official electric TCR isn't. This is because of the way energy is metered. For electricity the unit of measure is kWh and for gas it's the cubic metre. The kWh value of gas is dependant of its calorific value or the measure of heat that is produced by a volume of gas. By rights the supplier in providing the official TCR should state the calorific value used. The higher the calorific value the more money you save.

[Deleted User]

Would it be better for medium users if the 13,500 kWh was replaced by 1,200 cubic metres (m3). Gas bills always include a Calorific Value and the calculation for converting m3 to kWh. Should a consumer choose the higher or lower Calorific Value?

Quoting from the National Grid web page (Search on National Grid Calorific Value Description) "Gas passing through the National Grid pipeline system has a CV of 37.5 MJ/m3 to 43.0 MJ/m3".

To demonstrate:

Gas TCR 5.57p (£0.05575)
Correction Factor: 1.02264

1. Gas 1200 m3 per annum Calorific Value 39.4
kWh = 1200 x 1.02264 x 39.4 / 3.6 = 13,431 kWh
13,431 x £0. 05575 = £748.77

2. Gas 1200 m3 per annum Calorific Value 39.8
kWh = 1200 x 1.02264 x 39.8 / 3.6 = 13,567 kWh
13,567 x £0. 05575 = £756.36

Savings by going with (1) = £756.36 - £748.77 = £7.59 per annum

Suppliers are going to cry foul at this point because they will argue that they have no control over the supply calorific value. True, but the calorific value of gas is private to each supplier so one can check up on the other to see whether it's being manipulated.

The higher the calorific value the lower the volume of gas is being used because more heat is being generated. The question is should the supplier's calorific value be given more public visibility. Skimming is always a possibility by keeping the calorific value higher than it need be. The calorific value is a problem for the TCR calculation and yes it's fudged but by doing it the way they do it becomes workable.