# What is my Estimated Annual Cost?

Your Estimated Annual Cost is a prediction of how much your energy usage will cost over the next 12 months.

Your Estimated Annual Cost, sometimes called a Personal Projection, was introduced by Ofgem in 2014 as a tool to give customers a rough idea of what they should expect to spend on their energy and is shown on each statement we produce for you. The method for calculating this was provided by Ofgem.

*Your Estimated Annual Cost is just an estimate for the future and does not include any credit / debit balance you may have on your account. Your actual energy cost will depend on your usage. *

### How is my Estimated Annual Cost calculated

If you are on a tariff that is due to end in the next 12 months we are required to assume that you will move onto our So Out of Contract tariff (standard variable tariff) when your current tariff ends. So, if your current tariff ends in 3 months, our calculation imagines you spend 3 months on your existing tariff and 9 months on our So Out of Contract tariff.

#### Example

Assume your estimated electricity usage is 2,500 kWh and gas 14,000 kWh, and you have 3 months remaining on our So Aardvark tariff (gas unit rate 3.00p/kWh, electricity unit rate 10.00p/kWh. Standing charge 18.00p/day per fuel). Imagine our So Out of Contract tariff rates are: gas unit rate 3.50p/kWh, electricity unit rate 11.00p/kWh, Standing charge 18.00p/day per fuel.

To calculate your Estimated Annual Cost:

Unit Rate | Standing Charge | Total | |

Electricity 3 months on So Aardvark tariff | (2,500 x 3/12) x 10.00p | (365 x 3/12) x 18.00p | £78.93 |

Electricity 9 months on So Out of Contract tariff | (2,500 x 9/12)x 11.00p | (365 x 9/12) x 18.00p | £255.53 |

Gas 3 months on So Aardvark tariff | (14,000 x 9/12) x 3.00p | (365 x 3/12) x 18.00p | £121.43 |

Gas 9 months on So Out of Contract tariff | (14,000 x 9/12) x 3.50p | (365 x 9/12) x 18.00p | £416.78 |

Estimated Annual Cost | £872.67 |

### Could you pay less

Ofgem also introduced a requirement for us to tell you if we have a cheaper equivalent tariff (i.e. a 12 month fixed for another 12 month fixed) than the one you’re on. You’ll see this in the ‘Could you pay less’ section on the first page of your monthly statement.

The way we compare tariffs is by taking your Estimated Annual Cost (per fuel) and comparing this to the 12 month cost of our latest tariff for your usage. If the new tariff costs less than your Estimated Annual Cost, we'll tell you and by how much.

Using the example above, and our latest tariff rates (gas unit rate 2.50p/kWh, electricity unit rate 9.50p/kWh, Standing charge for both is 18.50p/day)

Electricity | Unit Rate | Standing Charge | Total |

Estimated Annual Cost | (2,500 x 3/12) x 10.00p + (2,500 x 9/12)x 11.00p | (365 x 3/12) x 18.00p + (365 x 9/12) x 18.00p | £334.46 |

Annual cost of electricity on new tariff | 2,500 x 9.50p | 365 x 18.50p | £305.03 |

Savings we'd show by switching your electricity tariff | £29.44 |

Gas | Unit Rate | Standing Charge | Total |

Estimated Annual Cost | (14,000 x 9/12) x 3.00p + (14,000 x 9/12) x 3.50p | (365 x 3/12) x 18.00p + (365 x 9/12) x 18.00p | £538.21 |

Annual cost of gas on new tariff | 14,000 x 2.50p | 365 x 18.50p | £417.53 |

Savings we'd show by switching your gas tariff | £120.69 |

Last updated: Mon, 4 May, 2020 at 4:29 PM

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