Earlier this week Ofgem announced it will formally ban all energy suppliers from back-billing customers for energy used more than 12 months ago.
The regulator has decided to ban all domestic and microbusiness suppliers from issuing back-bills for energy except in cases where consumers “actively prevent suppliers from taking or receiving accurate meter readings”.
Although Ofgem acknowledged several suppliers have signed up to, or follow, a voluntary agreement not to back bill customers past 12 months, it said the agreement does not cover all suppliers and those that have signed up do not “always follow” it.
Rob Salter-Church, Ofgem’s interim senior partner for consumers and competition said the move sends a “strong message to suppliers to improve the accuracy of the bills they send to their customers.”
The new rule on back-billing will come into effect at the beginning of May for domestic consumers and in November for microbusinesses.
We asked energy suppliers for their views on the announcement.
British Gas
A spokesperson at Centrica, parent company of British Gas, said: “Centrica is part of the Energy UK Billing Code and as such have been applying back-billing rules for some time, ensuring our customers are not left in a detrimental position as a result of billing issues. Throughout its consultation, we supported Ofgem extending this to all suppliers.”
SSE
A spokesperson at SSE, said: “SSE welcomes Ofgem’s decision to require all suppliers not to back-bill beyond 12 months.”
“SSE is proud of its award-winning customer service and already has a voluntary commitment in place not to back-bill domestic or micro-business customers beyond 12 months.”
Scottish Power
A Scottish Power spokesperson said: “We are supportive of the proposed changes as we already had a 12-month back-billing limit as part of our subscription to the Billing Code.”
Npower
A spokesperson at Npower, said: “In 2007, larger suppliers, including Npower, signed up to a voluntary commitment not to back-bill domestic customers for energy used more than 12 months previously (if the supplier was at fault).
“We are also a signatory to and exceed the I&C Shippers Supplier Group (ICoSS) and Energy UK Voluntary Standards for back-billing of microbusiness energy customers, by applying a 12-month limit. This remains our policy, covering domestic and micro-business customers on both traditional and smart meters”
EDF
A spokesperson at EDF Energy, said: “EDF Energy is fully supportive of Ofgem’s decision to formally ban gas and electricity back billing for energy used more than 12 months ago.
“Limiting back billing is a consumer protection measure that offers customer peace of mind and means that they aren’t faced with unexpected costs. That is why EDF Energy has already had this protection in place for domestic customers for 10 years, and why we are really pleased to see Ofgem ensuring it is practiced across the industry.”
Eon
Eon said that it has followed the Energy UK Code of Conduct for a number of years.
Octopus Energy
Greg Jackson, CEO at Octopus Energy, said: “We are also very supportive of banning back-billing beyond 12 months. As a company, if you can’t resolve something within a year you probably deserve to suffer the pain because of that. I think what it will do is to encourage suppliers to solve the trickiest questions faster, with more care and attention.”
Drax Retail
Jonathan Kini, chief executive of Drax Retail, said: “We’re delighted that Ofgem has amended the back-billing regulations. We believe it is important for businesses to have peace of mind when it comes to their energy bills, regardless of which supplier they are with.
“This is why Opus Energy voluntarily decided to limit back billing to 12 months several years back and had been calling on Ofgem to standardise this requirement across the industry. Our teams at Haven Power had already begun working towards the 12-month limit and will be fully compliant by the time the regulation comes into effect this autumn.”
- Benefit of smart meters
Ofgem said 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. It said: “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.”
Meanwhile, Victoria MacGregor, director of energy at Citizens Advice said although these changes have been “long called for” she said there has been evidence of suppliers trying to “game the rules” by blaming customers for billing errors.
She added: “Suppliers have not met their voluntary commitment to limit back bills for smart meter users to six months. They should honour their commitment to smart meter users and implement this change now.”
Currently there is no limit on back-billing meaning the average back-bill was estimated at £1,160 last year, with extreme cases seeing customers receive bills in excess of £10,000, according to Citizens Advice.