Energy watchdog to ban back-billing by utility firms

Ofgem is to formally ban gas and electricity suppliers from issuing customers with back-bills for energy used more than 12 months ago.

Most of the big suppliers are bound by a voluntary agreement that prevents them chasing a domestic customer for energy supplied more than a year ago.

After a consultation, the energy regulator has banned all suppliers from back-billing, where the consumer has provided meter readings and acted in good faith.

The ban, which also covers small businesses, does not come into effect until early May.

Most billing problems stem from issues with a supplier’s billing system, or because the meter used is not correctly registered at the customer’s address.

In the face of such problems, suppliers will estimate bills until they have an actual meter reading that may show that the customer’s consumption is higher than expected. Suppliers then send a “catch-up” bill to recover the difference. In other cases, customers have not received bills in 20 years.

Ofgem said the typical back-bill was £1,160, but they can be much higher, leaving customers struggling financially or even in debt, and can cause stress.

Consumers who actively prevent suppliers from taking or receiving accurate meter readings will not gain this benefit, the regulator said.

As smart meters are rolled out across the UK, suppliers will no longer need to rely on estimated bills and send catch-up bills to customers. Suppliers have obligations to make sure they use the technology, to provide accurate billing.

Rob Salter-Church, Ofgem’s interim senior partner for consumers and competition, said: “Getting billing right is an essential part of customer service, and it’s unfair that consumers should be left out of pocket when through no fault of their own they’re issued with a shock bill from their supplier.”

Victoria MacGregor, the director of energy at Citizens Advice, said: “Previously we’ve seen evidence of suppliers trying to game the rules by blaming customers for billing errors, cases where suppliers have ignored their commitments entirely.”

Lawrence Slade, the chief executive of Energy UK, said: “Energy companies take accurate billing very seriously and where there are problems, the majority are resolved within 24 hours.”