Ofgem proposes new protection for consumers from back-billing

Suppliers will not be allowed to back-bill customers for energy used more than 12 months ago under new proposals from 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.

In 2007 energy suppliers signed up to a voluntary commitment not to back-bill domestic customers for energy used more than 12 months previously, if the supplier is at fault. Since then, the energy supply market has expanded from 11 suppliers to over 50 currently.

Ofgem is now concerned, in part due to receiving case studies from Citizens Advice, that the voluntary principle is not being applied consistently and that not all suppliers have appropriate back-billing protections in place.

Rachel Fletcher, Senior Partner, Ofgem said: “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.  Smart meters enable suppliers to remotely obtain actual, rather than estimated meter readings, which should allow them to reduce the length of time they need to back-bill these customers.

Stakeholders will be able to comment on detailed proposals that will be published over the summer. Ofgem expects the new rule to go live this winter.