- Ofgem is banning suppliers from backbilling customers for energy used more than 12 months ago.
- These ‘shock bills’, which are typically £1,160, can leave customers struggling financially or even in debt
- The existing voluntary agreement for suppliers not to backbill past 12 months does not protect all consumers from receiving these bills
Ofgem is banning suppliers from issuing customers with backbills for energy used more than 12 months ago (1).
Backbills can result from problems with a supplier’s billing system, or from suppliers estimating bills until they have 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.
The typical backbill is £1,160, but they can be much higher, leaving customers struggling financially or even in debt and causing stress (2).
Many suppliers have signed up to, or follow, a voluntary agreement not to backbill customers past 12 months (3). However, the voluntary agreement does not cover all suppliers, and those that have signed up do not always follow this agreement.
Ofgem, which consulted on this issue last year, has decided to ban all domestic and microbusiness suppliers from issuing backbills for energy used more than 12 months ago. The exception is where consumers actively prevent suppliers from taking or receiving accurate meter readings, for example by tampering with or obstructing access to the meter (4).
As smart meters are rolled out across the UK, suppliers will no longer need to rely on estimated bills and send catch-up bills to customers. Suppliers have obligations to make sure they use the technology, once smart meters are installed, to improve services for customers for example by providing accurate billing.
The new rule on backbilling will come into effect at the beginning of May for domestic consumers and in November for microbusinesses.
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 backbills 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.”
Notes to editors
- The decision follows Ofgem’s open letter in April 2017 and consultation in November 2017 to protect customers from backbilling. Details of Ofgem’s final decision has been published.
- The median domestic backbill – the midway point between the lowest and highest - was £1,160 in 2016/17 (which is based on a random sample of data from Citizens Advice between October 2016 and March 2017). Extreme cases have seen backbills in excess of £10,000. The median length of a backbill was 24 months for domestic consumers. Case studies from Citizen’s Advice demonstrate backbills can be particularly detrimental for vulnerable consumers. More details on the impact of backbills can be found here
- Read more about the current voluntary agreement for domestic consumers and for micro businesses.
- Suppliers can still backbill customers past 12 months where the customer’s behaviour is obstructive, such as blocking physical access to a meter, or manifestly unreasonable, such as tampering with a meter or stealing energy. Consumers will not be at fault for failing to provide meter readings. Suppliers will need to assess consumer behaviour on a case-by-case basis. Suppliers are allowed to chase unpaid bills that they have previously sent in compliance with their obligations.
For media, contact:
Tim Webb: 0207 901 7179
Media out of hours mobile: 07766 511470 (media calls only)
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
For energy insights and updates straight to your inbox from Ofgem, please subscribe.