Energy suppliers will be banned from back-billing customers for energy used more than a year ago, under proposals published by energy regulator Ofgem.
Back-bills mainly result from suppliers using estimated bills until they take an actual meter reading, which may show that the customer’s consumption is higher than expected. Suppliers then send a ‘catch-up’ bill to recover the difference. Sometimes this can result in large amounts being owed.
Energy providers introduced a voluntary back-billing principle in 2007, which states that, if a supplier is at fault, they will not seek additional payment for unbilled energy used more than 12 months prior to the error being detected and a corrected bill being issued.
The suppliers active in the market at the time committed to apply this principle. However, in the 10 years since it was introduced the market has changed, and there are now over 50 active suppliers compared to just 11 in 2007. Ofgem says it’s “concerned”, in part due to receiving case studies from charity Citizens Advice, that the voluntary principle is not being applied consistently and that not all suppliers have appropriate back-billing policies in place.
Rachel Fletcher, senior partner at Ofgem, says: “Getting billing right is an essential part of customer service, but when things go wrong we want to ensure that all customers benefit from the same protection against back-billing. We cannot be certain that this is the case now under the voluntary commitment. We expect suppliers to put their customers first, which is why we are proposing a new enforceable rule to provide this protection.”
Ofgem is also considering whether to introduce a shorter time limit on suppliers back-billing customers as smart meters are rolled out.
Detailed proposals will be published over the summer and put out for consultation, with the new rule expected to go live this winter.