For this task we were required to create a model that can be used to economise on my quarterly household electricity bill.

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Coursework modelling 1B - Write Up

For this task we were required to create a model that can be used to economise on my quarterly household electricity bill. My family quarterly electricity bill may be too high. I need to try and devise a method to bring the bill down to an acceptable level. There are lots of aspects of an electricity model that need to be known. Some of the important ones are:

  • Unit- these are kilowatt-hours, which are the amount of hours an appliance uses multiplied by the kilowatts the appliance has.
  • Tariff- the rate at which a company charges a unit.
  • Two-tier tariff- this can also be called a split rate. There are two different costs per unit. There is usually a cost for the first units up to a certain value, sometimes known as a split value, and a different cost per unit for any units after the split value. My bill uses a two-tier tariff. I have named it a split rate model throughout this write – up.
  • Value added tax (VAT)- this is usually a percentage and is added on to a price.
  • Standing charge- a value of money that is added onto a price. It is normally a value without percentages, and is added on to a price just for using a supplier.  

There are many different types of bills. The bills are usually paid quarterly. There is a standard model, which is simply calculated by multiplying the unit amount by the cost per unit. A unit can also be called a kilowatt- hour (kWhr). By multiplying the kilowatt of an electrical appliance by the time the appliance is used, in hours, we can obtain a value which is measured in kWHr. For example, a 0.1kW bulb is switched on for 20 hours. To work out the units, you must multiply the kW amount by 20, to obtain the amount of electrical units the bulb uses. The cost of the electrical appliance can be worked out by multiplying the total units used by the appliance by the cost per unit. This varies for different suppliers. Npower for example has a cost of 6.72p per unit. After the units used by an electrical appliance have multiplied the cost per unit we can obtain a cost for the electrical appliance. It is then a matter of working out how much units are used altogether by all of the units, and then multiplying the amount by the cost per unit. This is how a bill can be made. The resulting value would be the price needing to be paid. A standing charge may also be added. This is a sum of money that is added to the total cost for the units. VAT is then worked out after the standing charge has been added onto the unit total. VAT is usually about 5% for most suppliers. The VAT is calculated after the units cost and the standing charges have been added together. Then to work out the final price of the bill per quarterly, you would need to work out the total of the VAT value the total cost for the units, and the standing charge. This should give you the bill amount. This is how a standard model bill is worked out.

There is another bill, which works differently to a standard model. This model works by having two different costs per unit. A split value is needed, such as 182 units for npower. The first 182 units would cost a certain amount, and the units after that would cost a different amount, usually cheaper than the first cost. Npower has a cost of 8.210p per unit for the first 182 units and 7.040p for any units after 182. Multiplying the first amount of units up to the split value, and then adding this to the total of the cost of the units after the split value can work out the total for the units. This gives you the total cost for the units. A standing charge is usually not added to a split rate model. However VAT for most companies are still applied and are applied on the total cost for all of the units. After the VAT has been applied, a total cost can be obtained by the total of the cost for the units and the VAT cost. This total should give a bill amount.

Economy 7 is another variation to a bill model. Economy 7 works differently to the models mentioned above. It calculates a total for day and night costs separately  and then totals them for a price. The night period usually must last for about 7 hours. Most economy 7 suppliers have their night periods at about this length. The user can normally decide at what times he/she wants his/her night period. Economy 7 has a different cost per unit for day and a different cost for night. The night cost is usually less than the day cost. For npower, the cost for day is 7.3p and the cost for night is 2.85p. Separate unit totals are worked out for day and night and the costs are applied to each of these unit totals. The two cost totals are then added together to get a total cost for day and night units. Standing charge is then applied here. VAT is then calculated and a total can be obtained by adding the total cost for the day and night, the VAT, and the standing charge. People benefit from economy 7 by using their high wattage appliances at night if possible. Therefore, the cost for this would be less.  

Economy 7 can also calculated by working at a split rate. The split rate is applied to the daily units. This is probably because the majority of the units are used in the daytime. Economy 7 split rate works the same as the normal economy 7 because a period of time is still needed for the user’s night, and the day and night values are still worked separately. Similar to the split rate model, a split value is needed which determines the value at which the pricing will change. Also, similar to the split rate model, the price after the split value is usually less than before it. After the supplier makes a split value,, the bill can begin to be made. British Gas, a company that uses economy 7 split rate modelling, has a split value of 900 units. The first 900 units are priced at 12.14p and the units after the split value are priced at 6.11p. The day cost is worked out exactly like the original split model is worked out. The night cost is usually worked out as a standard model. The night value is worked out normally, by multiplying the unit number by a cost per unit. When the day and night costs have been worked out, a total needs to be worked out by adding the two values together. This gives the total cost for all the units - day and night. Standing charge, if there is one, is added on to the total. VAT is then added on to this value. The bill is then worked out by adding the three values together.

These are the most common models used for electricity billing. However, there is also an ultimate model. Bills are usually paid by quarter, so therefore bills need to be worked out to agree with this.

There are many ways we can economise our electricity. The task set for us was to economise our electricity. Changes in electricity usage would affect the bill. Also, changes in tariffs would also obviously change the bill.

The next problem that I faced is to decide how to model the electricity bill. There are many ways of doing so. One possible way is to draw up tables by hand and working out totals by pen and paper. This wouldn’t be very useful as there is a lot of technology now that can do many of the things that we can do on paper ourselves, but more efficiently and quicker. Therefore, I decided that the best way to carry out this task was to use computers and appropriate software. There are many pieces of software with different functions in them. Microsoft Word, Access, Publisher and Excel can all handle tables well. However, it would have to be a decision out of these pieces of software. Microsoft Word is able to have tables that hold data. However, calculations can’t be made to the tables. A lot of calculations are needed, so Word probably isn’t the best option. Publisher, like Word can hold data on tables, but nothing can be done with the data, in terms of formulae and calculations.

Access is definitely more reliable and efficient than Word and Publisher. This is because the software is designed to hold data. Access can do calculations but it is really difficult to do. The best option was to use Excel.  

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Microsoft Excel is an even better piece of software to use for the given task. Excel can store lots of data, and there are a lot of mathematical functions that it can do for you, such as PRODUCT and SUM. These are the simple mathematical operators that Excel can use. There are also other important formulae that can be used, such as IF and fixed cell referencing. These all come in use somewhere in calculating an electricity bill. I will explain the formulae later on in my write- up. The calculations Excel performs are by relating data through formulae. ...

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