What is a personal projection?

This article will explain what a personal projection is, where it can be found, how it’s calculated, and how to use it to reduce your energy costs.


What is it and how is it calculated?


A personal projection is an estimation of how much money you will spend on either gas or electricity over the next 12 months.

Your personal projection can be found on your bills from your energy supplier.

It can be calculated by either looking at your actual consumption of energy (measured in kWh) over the previous 12 months and make the assumption that this is what you will use in the next 12 months.

If you haven’t been able to provide this, the supplier will make an estimation based on current details that they have about you (e.g ongoing energy usage data or information about the size of your property).

In addition to looking at your future estimated energy usage they will add in the rates at which you currently pay for either your gas or electricity to complete the calculation. If you’re on a standard variable price plan, then it will take into account any known price increases that will be happening too.

Remember that in both cases a personal projection is just an estimate. Even if you provide your recent 12 months usage, it does not guarantee that you will spend this amount of money over the next 12 months as your energy habits might change over this time. For example you might increase or decrease the amount of appliances you own in the household. Or you might replace existing appliances that use more or less energy to run.


Why does my personal projection keep on changing?


The yearly estimate may change from month to month for a few different reasons.

If you’re on a standard variable plan, new price increases may be announced that had not been foreseen before and will be inputted into the overall calculation.

Your energy usage might start to change in which case the supplier will adapt their overall forecast based on new data.

If you’re on a fixed plan you might see it going up every month. The reason for this is that a personal projection is constantly updated to estimate your bill from 12 months in the future of your most recent bill.

With all fixed plans there is an end date. If your personal projection takes into account time after your end date, it will assume that you would have been moved onto the supplier’s standard variable tariffs during this time, which are usually more expensive.

To explain this further let’s assume as an example you have a 12 month fixed plan that started on 1st July 2016, and has an end date on 30th June 2017, and you’re looking at your January 2017 bill. For this bill the personal projection will take into account your fixed energy prices over the next 6 months, plus the energy prices based on a different standard variable plan over the last 6 months of the year, which will most likely look more expensive.

As a result it’s not uncommon to see your personal projection rise as you approach the end date of your fixed plan tariff. There has been much criticism of this as it’s an unfair assumption and can make the personal projection confusing.


How can I use it to reduce my energy costs?


As well as providing you a snapshot of your future energy posts, suppliers use it as a benchmark to show you whether there are any cheaper plans for you to switch onto (this will be displayed on your bill). However, remember these would only be the cheaper plans that they can provide, not what’s available on the market.

In any case for the reasons mentioned above, it can be difficult to get an accurate picture of whether you are paying too much (especially if you’re on a fixed plan).

In order to get an overview of the cheapest plans in the market, use Lumo to upload your latest energy bill or enter your postcode to compare tariffs and see whether there is a cheaper plan you could be on.