“This is good news for consumers as it will stop energy companies from threatening them with often large bills that are older than 12 months”, said Councillor Mags MacLaren (SNP – Paisley Northwest).
Fuel companies will no longer be able to charge bills for gas and electricity that was used more than twelve months earlier under new rules outlined by energy regulator Ofgem. 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. The ban will start in May for domestic customers and in November for the smallest businesses. The only exception is when customers have purposefully prevented the company from taking a reading.
Many suppliers had signed up to, or follow, a voluntary agreement not to backbill customers past 12 months. However, the voluntary agreement does not cover all suppliers, and those that have signed up do not always follow this agreement.
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.
Rob Salter-Church of 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.
Welcoming the ban, Councillor Mags MacLaren added:
“Consumers should not be penalised for billing mistakes that are the fault of their supplier, so this is a welcome move from Ofgem.
“Billing and metering problems are one of the most prevalent energy issues reported across the Citizens Advice Service in Scotland, and unexpected bills can make it very difficult for consumers to make ends meet.
“We hope that this will lead to better billing practices from suppliers.”