Ofgem moves to curb back-billing

A new, enforceable, 12-month limit may be reduced further as smart meters roll out

A new, enforceable 12-month limit may be reduced further as smart meters roll out

Ofgem wants to stop energy suppliers from back-billing customers for energy used more than 12 months ago, it has announced.

The move has come, in part, as a result of concerns raised by customer champion Citizens Advice. The charity has repeatedly warned that supplier billing and metering inaccuracies were leading to unfair back bills. It also recently raised the alarm over back bills received as a result of customers moving from “dumb” to smart metering.

Ofgem’s decision to enforce back-billing restrictions also shows that the regulator, and consumer groups, no longer believe the existing voluntary code of practice on back billing provides sufficient protection for customers.

Revealing Ofgem’s plans to curb supplier scope for back billing, the regulator’s senior partner for consumers and competition, Rachel Fletcher 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.”

Citizens Advice welcomed the news that Ofgem had finally heeded its warnings on back bills.

Chief executive Gillian Guy said: “We’ve long been calling on the regulator to introduce a mandatory time limit for back bills instead of relying on voluntary action – which suppliers have refused to apply in some cases.”

She said that many customers are effected by back bills “through no fault of their own” but that the impact of being charged for “hundreds or even thousands of pounds” of historical energy use “can throw people’s finances into disarray”.

Singling out one particular instance of extreme back-billing, Guy said a customer received a bill for over £3,000 after their energy company stopped taking their direct debit payment but didn’t tell the customer.

“The firm refused to apply the 12 month back bill limit, leaving the customer to pay the full bill. We are helping the customer challenge these costs but Ofgem’s plans today should protect people in similar situations in the future.”

Energy Ombudsman Lewis Shand-Smith, joined Citzens Advice in welcoming Ofgem’s news. He said that “self-governance” on back billing standards was viable in a small energy market, but due to growth in the number of suppliers, is no longer supportable.

Shand Smith added that Ofgem’s new approach should “see customers treated fairly, regardless of which energy supplier they choose.”

As the national smart meter rollout progresses, Ofgem has said it may move to further reduce the time period allowed for back billing. It is calling for stakeholder feedback on this, and the proposed enforceable 12 month limit over the summer.

Again, Guy welcomed the intention to further reduce back billing limits, recommending the regulator eventually instigate a 3-month limit for smart meter back bills.