## British gas' formula used to calculate gas bills

By Value hunter on Mar 16, 2011 | In In real life, Money chat, Quango watch

After many requests for the formula used by British gas, to work out the amount of money they charge me for gas, I have finally managed to get hold of a copy of what British gas staff are using to calculate and check billing amounts and the figures required for the calculation formula.

It looks complicated, but it's really quite simple once you read through it a couple of times.

**Step 1:**Work out how many units the customer has used, since their last bill.

**Present reading minus previous reading = number of units used.(HCF = Imperial units, M3 = Metric units)**

**Step 2:**Convert imperial units into metric units.

**If customer has imperial meter (HCF) then multiply imperial units by 2.83 = Metric units (M3)If customer has a metric meter (M3) then skip to step 3.**

**Step 3:**Convert units used on meter to kWh (Kilowatts per hour) - this is the formula British gas use to convert.

*M3 x 1.02264 (VCF) x Calorific Value (CV) divided by 3.6 = kWh (kilowatts per hour)*

* For Calorific value (CV) on metric meters, press Button A and skip to menu option 16, this will give you the calorific value (this changes every week, normally on Wednesdays at 2am) being used that week.

Once you have the calorific reading, convert this into BTU's - British Thermal Units - by dividing the CV number on your meter by 0.0373 - use this figure in the formula above.

If you have an old imperial meter, then ring British gas and INSIST that they tell you the calorific value being used for that week.

**Step 4:**Next we need to work out which kWh are charged at tier 1 and which at tier 2 (Or "unit price 1" and "unit price 2" on your statement/bill, without VAT added)

The tier prices can be found on the British gas pricing website here, they are different from your statement/bill "unit prices" as the tier prices quoted online don't include VAT at 5% (Which we will add on to the total of the bill at the end).

Tier 1 is charged for the first 7.34 kWh per day, all other kWh is charged at tier 2.

*Number of days the bill covers x 7.34 = Number of kWh to be charged at tier 1 rate.*

*Total number of kWh - Number of kWh to be charged at tier 1 rate = Number of kWh to be charged at tier 2.***Step 5:**Calculate the bill.

*Tier 1 kWh x tier 1 tariff rate (found on pricing website) = Cost of gas used at tier 1Tier 2 kWh x tier 2 tariff rate (found on pricing website) = Cost of gas used at tier 2Add them both together to get the total cost of gas.*

** *NOTE - **This total EXCLUDES VAT.

**Step 6:**Add VAT.

Domestic gas customers pay VAT at 5%.

*Total bill = Total cost of gas + 5%*

*** Important notes:**

- When working out your gas bill, don't forget to take off any payments/credits you have on.

These credits/payments would be knocked off after you complete step 5.

- The calorific value (CV) used to convert each meter unit to kWh is calculated as follows;

*"**Gas supplied to customers’ homes is passed through a testing station where the calorimeter measurements are recorded. There are two stations, located at Elton, near Middlesbrough and Halton in the East Midlands. Either station can be used to take the measurements although one station’s recordings may have a higher Calorific Value than the other. We have provided an undertaking to the Department of Trade and Industry that the lower calorific value will always be used when calculating gas bills. A British/Scottish Gas representative records the readings given by the calorimeters every Thursday. These readings are then used to determine the value we will use on bills to be produced the following week. This is done by calculating a rolling average, using each of the previous thirteen weeks’ lowest recorded values from the calorimeters"*

*-* This process is the same regardless of your british gas tariff, it's a universal process which changes weekly due to the calorific value (CV) readings. As you will see, this means that nobody benefits from a "set price" for their gas.

The other difference in price comes from the "Tier price" which varies dependant on which tariff you are on. Your tier prices can be found on the British gas pricing website.

I have tested tier prices with the help of friends of the website around the country, for prepayment gas tier prices, they all came in exactly the same.

### 8 comments

An hour on the phone to BG to get this answer but the adviser stil couldn't tell me!

All I wanted to know was how they calculated how many kwh's were charged in tier 1 and how many in Tier 2.. It's different on every statement and now I know why.

Many thanks, however,do you have any idea how to calculate how many kwh's I will be charged for in each for tier for electric. This formula doesn't appear to work but I have Economy 7.... 2 Tiers and a night reading!!

Thanks

Clive

I don't get, why the conversion is 2.83. According to this page (http://www.asknumbers.com/CubicFeetToCubicMeter.aspx) and my knowledge feet is a smaller than meter, so it should be 0.0283.

Gets me really confused.

This direct from British Gas, this is the standard calculations template, a copy of which I received after numerous requests and comes from, I believe, British gas' back office and is used by British gas' billing staff.

"If the customer has a 4 dial (imperial) meter, you need to convert the imperial units (HCF) to metric units (M3).

If the customer has a metric meter you can leave this step out and move straight onto Step 3.

Imperial units (HCF) x 2.83 = Metric units (M3)"

Took a while to find the original message, but got there in the end. Hope this helps

1ft³ = 0.028316846m³

check on the following website:

http://www.metric-conversions.org/volume/cubic-feet-to-cubic-meters.htm

Pete

Hope this doesn't open a can of worms!

"Yes we multiply the number of units used (in hundreds of cubic feet) by 2.83"

So the formula I posted here is used and accurate for British gas billing...

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