Ofgem announces ban on backdating energy bills over 12 months

It’s estimated that 10% of UK households are struggling to pay their energy bills. Despite a newly introduced energy cap which will save the most vulnerable households money, the ongoing issue of large backdated bills has been highlighted as one of the key reasons for high debts among consumers. In light of this, the agency Ofgem has announced that companies will soon be banned from back-billing customers for energy further than twelve months.

Ofgem pointed out that correctly billing customers is an essential part of customer service. Several companies are already part of a voluntary arrangement to backdate bills over twelve months. However, not all companies have signed up to the agreement, and even those that have aren’t legally required to comply with it. This is leaving large numbers of consumers with high bills, which can result in debt and financial hardship. According to the citizens advice bureau, last year the average bill came to £1160 – but here were some cases of bills being sent to customers for over £10,000.

The new ban, which is due to come into effect in May, will cover all backdated bills that were caused by errors with the suppliers billing system, as well as bills which have been estimated by the energy company and show the consumption as higher than it is. It doesn’t, however, apply to customers who have purposely prevented their energy supplier from taking an accurate meter reading. It’s been noted that consumers will not be at fault if they don’t supply their own meter reading, and cases will need to be looked at on a case by case basis.

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.”

Lawrence Slade, chief executive of Energy UK, added: “Energy companies take accurate billing very seriously and where there are problems, the majority are resolved within 24 hours. Suppliers are actively working to improve billing for their customers. That is why companies covering 80 per cent of the market have signed up to the Energy UK Billing Code to ensure greater accuracy of bills. Audit results of the code show year-on-year improvement and complaint numbers are falling.”