In the last few years, fines worth millions of pounds have been levied by Ofgem against energy suppliers for issues related to mis-billing (also referred to as "bad billing").
It may not be too surprising, then, to find out that often suppliers send a "back bill" or "catch up" bill when you haven’t been correctly charged for your energy use.
Regulations from Ofgem ban gas and electricity suppliers from charging customers for energy used more than 12 months previously, if the billing error is the supplier’s fault. Despite this, it has been reported that some energy companies continue to send bills to former and current customers to recoup on their own internal billing errors.
With energy bills at their highest for years, it's more important than ever that customers know how to resolve billing errors and ensure they're not paying more for their energy than they need to.
Why am I being charged for old energy usage?
There are a number of reasons why your supplier could have made errors in your energy billing.
Many households rely on estimated meter readings, instead of providing meter readings to their supplier regularly throughout the year. This can lead to customers underpaying - or even overpaying - their energy supplier. Poor internal processes could mean these underpayments are left unnoticed for months or years, hence a "back bill".
Usually, the billing errors are related to one-off mistakes specific to the customer’s situation.
What's a back billing scenario?
One back billing scenario might go as follows:
Nick notices that his supplier is overcharging him on his direct debit each month, leading to an energy credit of hundreds sitting in his account. He calls customer service to get this energy credit refunded and request his direct debit amount be reviewed.
However, an internal mistake leads to his direct debit being cancelled entirely.
The cancelled direct debit goes unnoticed by both Nick and the supplier for months — until the supplier picks up on the mistake and sends Nick a bill for all the missed payments at once.
There could also be issues with the way suppliers access meter information and link it to customers' addresses. Some households, especially flats in new-build properties, are charged under the wrong meter number because of addresses not corresponding to the energy meter numbers on file for them in the national database. This can take a lot of time and effort on the part of customers to sort out, especially if they've attempted to switch to another supplier.
If you're moving into a new house and want to switch energy supplier, make sure the right meter numbers are registered to your new address before initiating a switch - otherwise you might have to deal with two energy suppliers rather than just one.
What are Ofgem’s back billing rules?
From 2007, Ofgem back billing rules state that energy suppliers can no longer try to reconcile incorrect domestic energy charges from more than 12 months ago, if the supplier itself is at fault for not billing the household correctly.
This is known as the Back-Billing Principle, and suppliers must adhere to it. It states:
"If your supplier is at fault, it 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."
Do I have to pay a back bill?
The Ofgem Back-Billing Principle as stated above applies to you and your energy bill if:
Your supplier failed to bill you at all and you have requested bills from it
Your energy supplier billed you using estimated meter readings instead of valid readings provided by you or a meter reader
Your supplier billed you incorrectly by mixing up meter readings, and failed to act upon information available to put this right
Your supplier failed to do anything about a query or fault you have raised regarding your account or meter and subsequently allowed a large debt to build up on your account
Your supplier failed to reassess a payment arrangement (e.g. a request to change your direct debit) within 15 months, or failed to reassess based on a reasonable estimate.
The Back-Billing Principle does not apply to you and your bill if:
You have been using the gas or electricity supply but have made no attempt to contact the supplier to arrange payment. This includes moving into a property and making no attempt to let a supplier know you are the new tenant or homeowner
You have wilfully avoided payment
You have not co-operated with attempts to obtain meter readings or resolve queries requested by the supplier. This includes failing to allow access to the property or failing to respond to requests for meter details or meter readings.
What do I do if my supplier has sent me an incorrect back bill?
Your first step if you have been incorrectly back-billed is to contact your energy supplier. You must follow their specific complaints-handling procedure.
If you have done so and still have not had the issue reconciled, you can move to the next step, which is to contact Citizens Advice on 08454 04 05 06 or at its website.
The third step is to enlist the help of the Energy Ombudsman.
There are procedures and rules that apply to when and how you should contact either the Ombudsman or Citizens Advice. Read our guide that details how to make a complaint about energy for step-by-step info on escalating your energy complaints.
