Back-billing to be investigated by Ofgem

Back-billing to be investigated by Ofgem

Energy regulator, Ofgem, has announced it is planning to introduce a project to strengthen current back-billing arrangements. Practices in this area vary significantly between suppliers, and Ofgem is concerned that consumers need more protection.

Back-billing occurs when an energy supplier estimates a customer bill, or does not charge for all of the energy used. A ‘re-calculation’ of the bill is sent to the consumer at a later date. This bill will include the costs for energy for which they have not previously been charged for.

Under current guidance passed in 2007, suppliers should not seek additional payment for this ‘unbilled’ energy more than 12 months after the energy has been used. Adherence to the principle has so far been voluntary and Ofgem is looking to introduce stronger consumer protections to it.

The energy regulator said it will be focusing on:

  • What new licence obligations it will need to protect only domestic or both domestic and non-domestic consumers;
  • Different limits applying for different consumers with respect to their metering technology;
  • The level of detail any licence obligation needs to contain.

Ofgem’s project will be looking to introduce new licence obligations in this area, as it is concerned that not all suppliers have appropriate back-billing arrangements in place. For microbusinesses, the time limit of back-billing for consumers with smart meters currently varies widely. The limit can range from between six months and three years for power and between six months and four years for gas according to Ofgem data. This variation is larger than for those suppliers serving the domestic market, where the limit tends to be between six and nine months. Any new licence obligations should consider reducing the inconsistency across the market.

Introducing smart meters

In our experience, we have seen back-billing occur in excess of 18 months. Usually, an event such as change in supplier could be the reason for the longer time period a bill needed to be re-estimated. The rebilled amount, however, could vary substantially due to changes in the meter read as suppliers try to improve the accuracy of their bills.

As smart meters are rolled out, the time to obtain a more accurate estimate will become much shorter, which will reduce the limits of back-billing.

Utilitywise can help

Here at Utilitywise we have plenty of experience checking energy and water bills for our clients. We’re can perform a retrospective check of your bills, as well as validate any new bills before you pay them.

96% of our clients’ bills are accurate, compared to the industry average of just 75%.

As part of our service offering we can also provide:

  • Budget Reports
  • Cost and Consumption Reports
  • Exception Reports
  • Accruals Reports

To find out more about our bill checking and bureau services call 01527 511 757 or email corporate@utilitywise.com.

You can also download our bureau services brochure – Utility Bill Optimisation – here.

Veronica Truman

Posted by on Monday, the 24. April at 10.00

Veronica Truman has been working in the energy industry since 2002 and currently manages the Market Intelligence, Analytics and Bureau Teams for Utilitywise.These teams are responsible for bespoke strategic consultancy projects for their clients, as well as delivering detailed analytics on clients’ consumption data. In addition to this, the Analytics team have developed models to forecast commodity and non-commodity charges out to 2040, and a market-leading Triad forecasting model.