Have you received an energy bill from your supplier asking for more money? It happens surprisingly often for energy customers, but new Ofgem back billing rules may mean that you don’t have to pay. Find out everything you need to know about the issue and whether you’re required to cough up for erroneous bills with our handy guide.
Put simply, back bills are catch-up bills that your energy supplier sends to you when it didn’t charge you correctly for the energy you have been using. Although it seems surprising that energy suppliers could make errors in such an important area, it is actually a fairly common occurrence. In fact, over the past couple of years, Ofgem has fined the big six energy suppliers a total of £53 million for bad billing practices.
In the UK, the average gas and electric bill amounts to around £104.50 per month, or £1,254 a year. And according to Ofgem, the typical bill for back billing comes out at £1,160, although in some cases, it could be much more. That’s a significant amount of money, and if you’re incorrectly undercharged for your energy bill, you could end up needing to repay a substantial amount. This can have a serious effect on your household’s finances, so it’s important to know exactly what to do if you encounter any issues with back billing from your energy supplier.
There are several different reasons why your energy supplier may have made an error when calculating your electricity bill. Here are some of the most common reasons for back billing:
Estimated meter readings – In most cases, households rely on estimated meter readings, rather than providing meter readings to their energy suppliers throughout the course of the year. In some cases, this means that customers will either underpay or overpay. Due to internal oversight on the part of the energy supplier, these incorrect payments may go unnoticed for a significant period, leading to back billing.
Incorrect meter information – Sometimes, a household will be paying for energy from an incorrect meter number. This means that your household may unknowingly be paying for energy usage from another property. If this other property has a lower energy usage than your own property, you may have been underpaying, leading to back billing.
One-off mistakes – Most of the time, back billing is simply the result of a one-off mistake from the supplier or the customer. For instance, a customer may ask for their direct debit to be reviewed in the case of an energy credit, and the supplier may accidentally cancel the direct debit. This cancellation may go unnoticed for a significant period, and when it is discovered, the customer will have a number of missed payments, leading to back billing.
Fortunately, there are a set of principles – known as the Ofgem back billing rules or the back billing principles – that can help you work out what to do if you’ve received a back bill from your energy supplier. Essentially, these back billing rules state that energy suppliers cannot attempt to rectify incorrect energy charges from longer than 12 months ago, assuming that the supplier was the party at fault, not the customer.
If your supplier has sent you an incorrect energy bill from over 12 months ago, you may not need to pay it if the following conditions are met:
Your supplier sent you an incorrect electricity bill by mixing up the meter readings and then failing to act on the available information to correct its error
Your supplier failed to bill you, and you requested bills from it
Your supplier billed you using estimated meter readings rather than meter readings provided by you or a meter reader
Your supplier did not reassess a payment arrangement (for example, a request to change your direct debit) within 15 months, or your supplier did not reassess based on reasonable estimates
Your supplier did not do anything about a query you raised about your account or meter, thereby allowing a large energy credit debt to build-up
If the above applies to your electricity bill, you may be in line to receive a back bill write off. The next step should be to contact your energy supplier for more information.
There are some situations in which the customer may be judged to be at fault for back billing, which means that you will still need to pay for the underpaid electricity bill. Here are some of the conditions which may mean that you still need to pay:
You willfully avoided paying for your energy bill
You used gas or electricity but made no attempt to arrange payment with your supplier (for instance, you moved into a new house and did not let your supplier know that you were the new resident)
You have not allowed your supplier to obtain meter readings or resolve queries (for example, you may have stopped it from entering the property or failed to respond to requests for meter details or meter readings)
If the above applies to your energy bill, you probably won’t be able to get a back bill write off. This means that you will need to pay for the back billing that you have received.
If you believe you have been sent an erroneous electricity bill, the first thing you should do is contact your energy supplier. It will have a specific set of guidelines for handling complaints that you should follow. If the complaint hasn’t been resolved, there are further steps you can take, so contact Citizens Advice for a little more information. If the situation still has not been solved, you can contact the Energy Ombudsman.
If you are required to pay for back billing, it’s possible that you won’t have enough money to deal with the bill all at once. This is sometimes an issue when households have already budgeted for their energy bills before getting hit with an electricity bill for thousands of pounds from 12 months ago. In this situation, you can ask your energy supplier to set up a payment plan that will allow you to repay the electricity bill over the same length of time that the debt built up. For example, if the back billing stretches back nine months, you should be able to set up a payment plan that spreads your repayments across nine months.
The introduction of new processes like smart meters should reduce the amount of back billing that customers have to deal with in the future. However, customers with smart meters still encounter issues with back billing, and according to Citizens Advice, around 3% of smart meter customers haven’t had an accurate bill for over six months.
All in all, back billing can have a huge effect on your household’s finances, so it’s important that you understand what your rights are when it comes to these so-called “shock bills.” If you think that you have been erroneously charged for your energy bills, you should get in touch with your energy supplier as soon as possible, as it’s important to resolve these issues as quickly as you can.