Energy companies face one-year deadline for back-billing customers

ENERGY companies will be banned from “back-billing” customers for inaccurate meter readings which are over a year old under new Ofgem rules.

Under the change, which is being introduced in May, retrospective billing for gas and electricity customers will be limited only to those taken during the past 12 months.

At present there is no limit, meaning that the average back-bill was £1,160 last year, with extreme cases seeing customers receive bills in excess of £10,000, according to Citizens Advice.

Many suppliers are already part of a voluntary agreement not to back-bill customers past 12 months, but this does not include all companies and those that have signed up do not always stick to it, Ofgem said.

The new rule will come into effect at the beginning of May for domestic consumers and in November for microbusinesses. Ofgem said correct billing was an essential part of customer service, and large catch-up bills could leave consumers struggling financially or even in debt to their supplier.

As smart meters, which measure energy use in real time, gradually replace traditional meters, “back-billing” will be phased out.

Back-bills can result from problems with a supplier’s billing system or from suppliers estimating bills until they use an actual meter reading, which may show that the customer’s consumption is higher than expected.

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 customers.”

Alex Neill, Which? managing director of home products and services, said: “Receiving a back-dated energy bill of hundreds or even thousands of pounds is a real blow for consumers, particularly those who are already struggling with their bills.

“This ban won’t come into effect until May, so anyone worried about sky high bills should look to switch supplier now.”