Ofgem is to formally ban gas and electricity suppliers from issuing customers with bills for energy used more than 12 months ago.
Following a consultation that was launched last November, the energy regulator said bills for energy used more than a year ago will not be issued if customers acted in good faith.
At present there is no limit on back-billing meaning the average back-bill was £1,160 last year, with extreme cases seeing customers receive bills in excess of £10,000, according to Citizens Advice.
But Ofgem has been talking about this for over a year, and most of the big suppliers are already bound by the Energy UK Billing Code, a voluntary agreement that prevents them from chasing a domestic customer for energy supplied more than a year ago.
The ban, which also covers small businesses, comes into effect in early May.
Welcoming the news, Alex Neill, Which? managing director of Home Products and Services, said: “Receiving a back-dated energy bill of hundreds or even thousands of pounds is a real blow for consumers, particularly those who are already struggling with their bills.
“This ban won’t come into effect until May, so anyone worried about sky high bills should look to switch supplier now.”
Also responding to the announcement, Lawrence Slade, chief executive of Energy UK said by-and-large energy companies take accurate billing “very seriously”.
He added: “Suppliers are actively working to improve billing for their customers. That is why companies covering 80 per cent of the market have signed up to the Energy UK Billing Code to ensure greater accuracy of bills. Audit results of the code show year-on-year improvement and complaint numbers are falling.”
He then went on to suggest that the ongoing smart meter rollout will help bring about an end to estimated billing of any sort: “There are now over 8 million smart meters in UK homes and businesses, bringing many benefits including an end to estimated billing, helping consumers understand exactly what they are spending in pounds and pence, in near real-time.”