A recent survey has uncovered a significant knowledge gap among British consumers regarding their energy bills. Nearly nine in ten Britons (88%) admit they have no idea how the money they pay for energy is allocated, according to a study by Compare the Market.
Lack of Understanding on Standing Charges
The research found that 86% of people do not understand what standing charges are, despite them forming a fixed part of every energy bill. Standing charges cover the cost of connecting to the grid and maintaining the network, but they have become a point of contention as prices have risen. The average standing charge for electricity is about 46p per day, while for gas it is around 27p per day.
Green Levies and VAT Confusion
Additionally, the survey revealed that 78% of Brits are unaware of green levies included in their bills. These levies fund renewable energy schemes and energy efficiency programs. More than half of respondents (54%) did not know that VAT at 5% is applied to energy bills, a reduced rate compared to the standard 20%.
Impact on Household Budgets
With energy prices remaining high, the lack of understanding could hinder households from managing their finances effectively. Compare the Market’s energy expert, Peter Earl, said: “It’s worrying that so many people don’t understand what they’re paying for. Knowing the breakdown of your bill can help you identify ways to save.”
Call for Greater Transparency
The findings have prompted calls for energy suppliers to provide clearer information on bills. Currently, bills must show the unit rate and standing charge, but many consumers find the details confusing. The survey suggests that simplified billing could help consumers make more informed choices.
