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How is my energy bill calculated? – A breakdown of heat network tariffs

25th August 2020

Written by: Eelinn Vanquaethem, Marketing & Content Manager

Updated on: 24th February 2023

Heat networks are quite different from conventional gas boilers found in most UK homes. As fuel is bought at a wholesale price by your heat provider, you, as a heat network resident, usually benefit from lower prices for your heating & hot water. But with fuel coming into the building for all the connected homes, there’s a lot that plays into calculating an accurate and fair tariff.

As metering & billing specialists, having calculated heat network tariffs for over 13 years, we ensure residents only pay for the heating & hot water they use and the associated costs with providing heating & hot water to you. Your heat provider does not make a profit from your tariff in compliance with the Heat Network (Metering & Billing) Regulations 2014.

To fully cover the costs associated with your heat network, your tariff is split up into two charges: unit charge and daily standing charge. To help you understand these better, we have broken down what elements of your heat network are considered for each type of charge when calculating your heat tariff.

To view a breakdown of the tariff specific to your scheme,  please read the ‘Tariff breakdown' document, downloadable from the 'My development' page >


What is included in heat network energy bills and tariffs?

A breakdown of your unit charge

A breakdown of your daily standing charge

Other costs that may be included in your tariff 

What support is available to me to help pay for my energy bill?

What is included in heat network energy bills and tariffs?

Your heat network energy tariff will usually only include any costs associated with supplying heating & hot water to your home. To accurately do so, your tariff is split up into a unit charge and daily standing charge.

The unit charge should only cover the energy consumed by you and any associated heat losses. This tariff will usually fluctuate depending on how much heating & hot water you use.

The daily standing charge should only cover the cost of operating your heat network, and is as a result a fixed cost to be paid every day.

Both charges will be stipulated on your bill if you are on credit billing, on your in-home display, if you are on pay-as-you-go (PAYG), and on your annual account statement, which can be found and downloaded from our customer portal, my insite.

If you have cooling, this may also be managed by us, and will have its separate tariff made up of its own daily standing charge and unit charge.

Your tariff is set and regularly reviewed by your heat provider to ensure the price is fair and any fees charged do not exceed the cost of providing energy to your home. Your heat provider cannot legally make a profit from your tariff. If your tariff is increasing, this will be communicated to you in writing at least 31 days prior to being applied. If your tariff is decreasing, we will provide at least 10 days written notice.

Unfortunately, we are unable to change your tariff unless instructed to do so by your heat provider.

A breakdown of your unit charge

Your unit charge, also referred to as your energy charge or consumption charge, covers the bulk cost of the energy generated in the communal plant room. It also includes any associated heat losses between the supply point and your home. Your energy consumption is measured via the heat meter installed in your home, so you only pay for what you have used. You are charged for every kilowatt-hour (kWh) consumed within your property.

Your unit charge is typically comprised of two main elements: 

  1. Incoming energy price: This is the cost your heat provider pays to purchase the wholesale energy for your development. This is what is used to generate your heating & hot water. By bulk-buying energy for all connected properties, your heat provider is able to get a better price per kWh than the average household organising its own supply.
  2. System efficiency: This refers to heat losses that occur throughout a heat network. This is measured by how much energy is lost from the point the supply leaves the plant room to the point it comes out through your tap, radiator or underfloor heating.

Your final unit charge will be the units used (kWh) times the unit charge (£) set by your heat provider.

If you think your unit charge is too high, please check your kWh consumption and compare it to the average consumption for the size of your home. There may be ways you can reduce your consumption using some of our energy saving tips.

Figure 1: The average household uses between 2,600 and 5,500kWh of heating & hot water annually (source: SAV Systems)

Every six to twelve months, we review your energy tariff with your heat provider. This allows us to advice your heat provider on whether system efficiency improvements can be made, further helping to bring down the overall cost of running your heat network.

A breakdown of your daily standing charge

Your daily standing charge is the fixed charge passed on by your heat provider, which covers the cost of operating the heat network and delivering energy to your home. This is an annual fixed amount that is payable every day by all residents regardless of how much energy you use.

This is typically comprised of three main elements:

  1. Metering and billing costs: This is the cost of our services, alongside the cost of delivering reports as legally required by the Government.
  2. Standing charge heat provider incurs for incoming energy
  3. Data and communication costs associated with smart metering technology installed on-site (PAYG only)

Your final daily standing charge is the days in the billing period times the daily standing charge (£) set by your heat provider.

As your daily standing charge only covers the cost of operating your heat network, this part of your tariff remains constant and needs to be paid every day. You will therefore still incur this charge daily even if you are not using heating & hot water.

Figure 2: The above charts show what is calculated into unit charges and daily standing charges. The slices are only an example and the weighting of each element varies for each heat network.

Other costs that may be included in your tariff

Depending on your heat provider, the costs associated with running and maintaining the heat network will either be included within your building service charge or may be included in your heating & hot water daily standing charge. Your energy charge may also include elements to cover the upfront cost of the plant room and any future equipment replacements or repairs needed to keep the heat network in operation.

What support is available to me to help pay for my energy bill?

Between October 2022 and March 2023, the Government has given all UK households £400 paid out by electricity providers to support them through the energy crisis. Households on means tested benefits and pensioners can also get additional support.

In addition to this, the Energy Bill Relief Scheme has meant that the price of wholesale energy is capped with any cost savings made by your heat provider to be reflected in residents’ heat tariffs. This scheme also runs from October 2022 to March 2023 and will be replaced by a revised relief scheme from April 2023 to March 2024.

While this support is only temporary, pensioners can also get between £250 and £600 as part of the Winter Fuel Payment every year.

If you are having difficulty paying your bill, we recommend contacting your heat provider for additional support. You can also set up a Direct Debit payment plan to pay off what you owe in manageable instalments. You can do this by giving us a ring on your scheme-specific contact number. StepChange, the UK’s leading debt charity, can also offer expert debt advice and fee-free debt management.

Understanding the different elements calculated into your heat tariff can help to better identify what may be causing fluctuations on your bills and payments. This may, in turn, help you to make more energy conscious decisions. Insite are currently working on providing all residents with a tariff breakdown specific for their scheme to support you with this and better advice your heat provider on efficiency improvements, further helping to bring down the overall cost of running your heat network and your tariffs.

Insite Energy, Studio 4 Stuart House, St John’s Street, Peterborough, PE1 5DD

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