Estimated energy bills explained

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In this article, Canstar Blue discusses why energy retailers estimate your electricity bills and what can you do to avoid it.

But what’s the purpose of estimated electricity bills and why do some customers receive them instead of meter readings? Canstar Blue reveals the common reasons for estimated electricity bills and what you can do to avoid potential bill shock on your next electricity bill.

What is an estimated electricity bill?

An estimated electricity bill is for properties with an analogue electricity or gas meter. A meter reader will attend your property each billing period, record how much energy you’ve used during that period which then informs your accurate electricity bill. If the meter reader is unable to access your meter, they will leave you a note to explain and you will be charged for an ‘estimated’ amount of usage.

You may also receive estimated bills if you choose to pay monthly rather than quarterly. Having a meter reader visit your property isn’t cost efficient, so energy providers estimate your bill instead of a monthly reading. In this instance, you will likely have an accurate reading and settle the difference (i.e. if you have paid too much or too little) every quarter.

Additionally, if you are switching energy providers this may warrant an estimated bill to close the account. Previously, in order to switch energy companies, customers had to wait until a final meter reading was carried out, before their account was able to be fully transferred. Under new switching rules however, an electricity account can now be finalised and switched over to a new provider using an estimated bill. Similar to receiving a monthly bill, if your old provider re-calculates your final reading with a meter read after you’ve switched, you may end up having to settle the difference of your final bill with them at a later date.

Who is responsible for reading my meter?

Previously, your electricity and gas meters would be read by a meter reader employed by your local energy distributor, the company responsible for the network infrastructure in your area. However, new rules have since been introduced, which state energy retailers are now responsible for appointing metering coordinators. These metering coordinators are in charge of undertaking metering services on behalf of retailers, including installation, repairs and general maintenance.

What if I get a smart meter?

If you have a smart meter installed, your electricity usage information is fed digitally to your electricity distributor and there is no need for a meter reader to visit your property, or for you to submit your own reading. This means that smart meter customers will never receive an estimated bill.

How are electricity bills estimated?

Distributors don’t simply pass on an arbitrary usage figure for your electricity retailers to charge you. Your estimated electricity usage is based on previous billing periods, your household’s usage around the same time last year, and the average energy usage for that area. If there is no historical data on your electricity account with your provider (i.e. your a brand new customer) then most retailers will base your estimate on a similar customer’s average energy usage over the same time period.

How can I tell if my bill has been estimated?

If a meter reader can’t access your meter, they will leave a note explaining that your electricity provider will be provided with an estimated usage figure. If your usage has been estimated, you should see an ‘E’ next to the usage figure on your next electricity or gas bill. Depending on the retailer, there may also be a notice explaining that the bill has been estimated. If you have received an actual meter reading, you will see an ‘A’ next to your usage figures, as per below.

Will I have to pay more with an estimated electricity bill?

While it shouldn’t cost you more in the long term, if you have found one monthly bill to be noticeably higher or lower than your last monthly bill, an estimated bill could be the reason. Some energy retailers set monthly billing as their default option and declare how much you will be charged in monthly estimated bills in their energy price fact sheets. It’s very important to read these documents before agreeing to a new energy plan. Some retailers even allow customers with monthly billing to submit their own meter readings to ensure accurate bills all the time. This may take a bit of effort on your part, but could mean you avoid any shock settlements bills at the end of the quarter.

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What to do if you disagree with your estimated electricity bill

Receiving an estimated energy bill is pretty frustrating, especially if you think your bill is higher than it should be. So what should you do? Unfortunately, there’s not much that can be done in this instance, other than making sure that your meter is accessible for next time. The next time your meter is read, your retailer will check and correct your account based on whether you’ve been charged too much or too little. If you were overcharged on your estimated bill, then your next bill based on actual meter readings will be proportionately cheaper.

If you don’t want to wait for your next meter read to correct your account balance, your retailer may also allow your to submit your own meter reading to them. From here, your retailer can revise your previous bill and send it out to you. Any credits can then be carried over to your next bill. If you’ve received multiple estimated bills, some retailers will even revise the bills from a couple months back too. Meters should be read at least once every 12 months to ensure your are only paying for the energy you have used. If you have received multiple bill estimates it might be best to get in contact with your provider and organise a meter read.

How to avoid estimated electricity bills

There are a few simple steps to ensure you don’t receive an estimated bill:

1. Find where your electricity and gas meters are located and make them as accessible as possible
2. Work out when your next meter reading is and ensure any obstructions are cleared
3. If the meter reading date doesn’t suit you, then call your retailer. They may then be able to reschedule your meter reading date with the distributor

What happens if you miss several meter readings in a row?

At first you will receive several estimated bills in a row, which possibly means you’re paying too much for your energy. Again, this can be corrected once the retailer has access to an actual reading. If you go without an actual meter reading for more than 12 months however, it is best to contact your electricity retailer and ask for a proper meter read to avoid paying more than you need to, or worse, receiving a shock power bill because you’ve been paying too little for your usage.

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Original reporting by Simon Downes
Image Source: Pixels Hunter/Shutterstock.com