March 5, 2018
From May 2018, energy suppliers will not be allowed to back-bill customers for gas and electricity that they have used more than 12 months previously.
Energy regulator, Ofgem, believes that accurate billing is an essential part of customer service and that large catch-up bills could cause stress and leave consumers struggling financially.
Ofgem said the typical back bill was £1,160 and in some (extreme) cases have exceeded £10,000. The regulator said it was aware of 10,000 complaints in a year regarding energy supplier's back-bill procedures.
Most billing problems come from issues with an energy supplier's billing system, or because the meter used is not correctly registered at the customer's address.
When this is the case, energy suppliers will estimate bills until they have an actual meter reading. If the estimate hasn't been high enough and the customer's consumption is higher than expected, then energy suppliers send a "catch-up" bill to recover the difference.
With smart meters being rolled out across the UK, suppliers will no longer need to rely on estimated bills and customers shouldn't receive catch-up bills.
Rob Salter-Church, Ofgem's interim senior partner for consumers and competition, said:
"Large catch-up bills can leave consumers struggling financially or even in debt to their supplier.
"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.
"So we're taking action and banning suppliers from issuing back-bills beyond 12 months, where it's not the customer's fault. This sends a strong message to suppliers to improve the accuracy of the bills they send to their custom."
Citizen Advice welcomed the decision. Victoria MacGregor, director of energy at Citizens Advice, said:
"We have long called for the changes announced today. The new rules will deliver better protections for households and small businesses across the country. No-one should face a massive unforeseen bill that goes back years when it is their supplier that is at fault.
"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, and small businesses receiving unexpected bills running to tens of thousands of pounds."
Posted on March 5, 2018 at 12:02 PM