Receiving a surprise energy bill informing you that you owe your supplier several hundred – or even several thousand – pounds can be a huge financial headache. But it’s important not to panic and to make sure you understand what rights you have.
In this guide we take a close look at so called ‘back-billing’ and what you should do if you receive such a bill.
What is ‘back-billing’?
An energy ‘back bill’ is a catch-up bill that will be sent to you by your gas or electricity supplier if you have not been accurately charged for your energy use.
There are three main reasons why this might happen:
Estimated meter readings If your previous bills have been based on estimates and you haven’t provided your energy supplier with regular meter readings, you could be underpaying. An updated accurate meter reading might show you’ve actually used more energy than you’ve paid for, and you’ll be sent a bill requesting that you pay the amount owed.
Cancelled direct debit Errors sometimes occur through which a direct debit is accidentally cancelled. This might happen if, for example, you have queried the amount that’s being taken out of your account each month. Once the error has been spotted, you can guarantee a bill will rapidly be sent your way for the amount you now owe.
Incorrect meter In some cases, households have even been charged under the wrong meter number, resulting in huge back bill when the mistake is picked up.
In theory, issues such as these should spotted quickly, but in some cases it can take several months, by which time the amount owed can be hefty enough to cause financial distress.
What’s Happening In The UK Energy Market?
There are currently no energy deals priced below standard tariffs, so we have temporarily suspended our switching service.
Changing rules
In 2017 shocking data from Citizens Advice revealed that the typical back bill was as high as £1,160. In extreme cases bills were in excess of £10,000.
At the time, Rob Salter-Church, of energy watchdog Ofgem, 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.”
Following a consultation, Ofgem introduced new back-billing rules for all energy suppliers in 2018 (voluntary arrangements had been in place with major energy suppliers before this).
The rules apply to both household and microbusiness energy customers and mean:
- You cannot be charged for gas or electricity used more than 12 months ago if you have not been correctly billed by a supplier
- Suppliers must make these terms clear in their terms and conditions.
What should you do if you receive a back bill?
If you receive a back bill, the 12-month rules will apply if:
- You’ve asked your supplier to send you a bill, but you haven’t received one for over a year
- Your bills have been based on estimated readings rather than the accurate meter readings you’ve provided
- You’ve been charged for the wrong meter without realising
- Your supplier hasn’t resolved a query you raised about your account or meter
- Your supplier failed to reassess a payment arrangement, such as a direct debit, within 15 months.
If any of these situations apply to you and you receive a back bill for more than a year’s energy use, you should contact your supplier immediately.
Explain that you are protected by the back-billing rules and you should only be billed for up to 12 months’ energy use. Citizens Advice has a handy template for writing a letter to your supplier.
If your supplier continues to insist you pay the full amount, you’ll need to make a complaint – you can find out how to do this in our guide.
When won’t the rules apply?
There are certain scenarios in which Ofgem’s back billing rules will not apply. These include if:
- You have deliberately prevented accurate billing, for example by not supplying meter readings when requested or not allowing someone to take a meter reading for you.
- You have been using the gas or electricity supply but have not contacted the supplier to make a payment – this includes if you have moved home and not informed the new supplier that you are the new tenant or homeowner.
- You have wilfully avoided payment.
What to do if you can’t pay
If you can’t afford to pay your energy bill, it’s best to talk to your supplier as soon as possible and explain the situation. Your supplier may be able to draw up a repayment plan with you, based on what you can afford.
If you can’t agree a payment plan, you can contact Citizens Advice on 0808 223 1133 Monday to Friday 9am to 5pm.
How to avoid back-billing
The best way to avoid being sent a back bill is to ensure your bills are based on accurate meter readings and not estimates. If you don’t have a smart meter that automatically submits readings to your supplier on a regular basis, you’ll need to take monthly readings yourself and send them to your supplier.
It’s also worth checking your energy bills carefully to ensure all details are correct, including your bank account and direct debit information, and also checking that direct debits are being taken correctly each month or quarter.
Finally, if you move home, always give your old supplier your new address so that your account can be brought up to date and closed, and make contact with your new supplier as soon as possible.
This will enable your new account to be opened and ensure you are not billed for energy used at the address by the previous occupant.
What’s Happening In The UK Energy Market?
There are currently no energy deals priced below standard tariffs, so we have temporarily suspended our switching service.
