The electricity bill calculation formula
A domestic electricity meter records cumulative use in kilowatt hours (kWh), often called units. The reading does not reset each month. The difference between two readings is the electricity used between those dates.
For a single-rate tariff, use this formula: (current reading − previous reading) × unit rate in pence, plus (number of days × standing charge in pence). Divide the result by 100 to convert pence to pounds.
Most domestic tariff sheets and bills show rates including VAT, but not all displays use the same convention. Check whether your figures include VAT. If they do, the result of the formula is already VAT-inclusive; do not add tax a second time.
- Electricity used: current reading − previous reading.
- Usage charge: electricity used × unit rate.
- Standing charge: billing days × daily standing charge.
- Estimated bill: usage charge + standing charge, with VAT added once if necessary.
Worked example from two meter readings
Suppose the earlier reading was 18,420 and the later reading was 18,705. The household used 285 kWh: 18,705 − 18,420 = 285.
For this illustration, the unit rate is 25p per kWh and the standing charge is 60p per day, both including any applicable VAT. Over a 30-day billing period, the usage charge is 285 × 25p = 7,125p, or £71.25. The standing charge is 30 × 60p = 1,800p, or £18.00.
Add the two amounts: £71.25 + £18.00 = £89.25. That is the estimated electricity charge for the period. It does not include account credit, previous debt, Direct Debit payments, discounts or other supplier adjustments.
Find the correct readings, rates and dates
Use readings taken from the same meter and the same register. With a traditional digital meter, copy the whole numbers from left to right and normally ignore digits after the decimal point or shown in red. Smart meters usually send readings automatically, but the reading shown on the meter—not the in-home display’s cost estimate—is the figure to compare with a bill.
Find the unit rate and standing charge on your latest bill, tariff information label or supplier account. Rates can vary by tariff, region, payment method and meter type. Ofgem’s published averages are useful context for England, Scotland and Wales, but your own tariff figures give the more accurate calculation.
Count every day in the period, including days when no electricity was used. Ofgem defines the standing charge as a daily fee. If a bill runs from 1 August to 31 August, check the supplier’s stated billing period rather than assuming that every monthly bill covers 30 days.
Economy 7 and other multi-rate meters
Economy 7, Economy 10 and time-of-use tariffs record electricity on two or more registers. Do not subtract a day reading from a night reading. Calculate the change on each register separately, multiply each result by its matching rate, then add those usage charges and one standing charge.
For example, if the day register increased by 180 kWh and the night register by 120 kWh, multiply 180 by the day rate and 120 by the night rate. A single national average rate cannot reproduce a multi-rate bill accurately.
Register labels are not always as simple as “day” and “night”, and the active register on the display can be misleading. Match the register IDs and readings on the meter with those printed on the bill. Ask the supplier to confirm them if the labels are unclear.
What if the rate changed during the billing period?
If the unit rate or standing charge changed between your two readings, split the calculation at the change date when you have a reading from that date. Calculate the earlier portion using the old rates and the later portion using the new rates.
Without an intermediate reading, a supplier may apportion consumption across the period. Your simple estimate can therefore differ even when the opening and closing readings match. Check the bill for separate lines showing the dates, readings, rates and standing charges used.
The Great Britain energy price cap does not set one price for every household and does not cap the final bill. It limits unit rates and standing charges for protected default tariffs; actual rates depend on factors including region, payment method and meter type. Northern Ireland has a separate electricity market, so use a Northern Ireland supplier tariff rather than an Ofgem cap rate.
VAT in Great Britain and Northern Ireland
VAT treatment changes shortly after this article’s publication. HMRC says qualifying domestic electricity in England, Scotland and Wales is temporarily zero-rated from 1 October 2026 to 31 March 2027. Qualifying domestic electricity in Northern Ireland remains subject to the reduced 5% rate.
For a period that crosses 1 October in Great Britain, follow the rate breakdown on the supplier bill. Do not remove 5% from a published tariff figure unless the supplier states that the figure includes it, and never add VAT again to a rate already described as VAT-inclusive.
Why your estimate may not match the bill
First check whether the bill uses actual, customer or estimated readings. Citizens Advice warns that an estimated reading can make a bill too high or too low. If the estimate is wrong, take a current reading and submit it through the supplier’s app, website or telephone service.
Then compare the opening and closing readings, tariff dates, unit rates, number of standing-charge days and VAT treatment. Also look for account credit, previous balances, payments, discounts, debt repayments or export credits. These change the amount due but are not part of the basic cost of the electricity used.
Small differences can come from rounding. A large unexplained difference should be raised with the supplier, supported by dated meter photos where possible. Do not open, alter or tamper with a meter to investigate a bill.
Electricity bill calculation FAQs
How do I convert an electricity meter reading to kWh?
For a standard domestic electricity meter, subtract the earlier reading from the later reading. The difference is the number of kilowatt hours used. Use readings from the same meter and register, and normally ignore red digits or numbers after the decimal point.
Do I add the standing charge before or after the unit cost?
Calculate the usage charge and standing charge separately, then add them. Multiply kWh used by the unit rate for the usage charge, and multiply the number of billing days by the daily standing charge.
Should I add 5% VAT to my electricity calculation?
Only if the unit rate and standing charge you used exclude VAT and 5% applies to that supply and period. Many domestic tariff figures are already VAT-inclusive. From 1 October 2026 to 31 March 2027, qualifying domestic electricity is zero-rated in Great Britain, while Northern Ireland remains at 5%.
Why is my calculated bill different from my Direct Debit?
A Direct Debit is often a regular payment towards the energy account, not the exact cost of one month’s usage. Your account may build credit in lower-use months and use it in higher-use months. Compare the calculation with the bill charges, not just the payment taken.
Can I calculate an Economy 7 bill from one reading?
Not accurately. You need an earlier and later reading for each register, plus the matching day and night rates. Work out each register’s usage separately, then add both usage charges and the standing charge.
Estimate your electricity bill
Enter two readings from the same register, your tariff’s pre-VAT unit rate and daily standing charge, and the number of days in the billing period for an itemised estimate.
Sources
Calculation, meter-reading and VAT guidance was checked against the following sources on 23 September 2026: