Energy firms hitting millions with back-bills

Millions facing demands for an average of £206 from their energy supplier.

As many as 2.1 million households may have been hit by shock energy bills in the last year according to new research from Citizens Advice.

The charity says the practice of back-billing – where energy firms send a revised bill when you haven’t been correctly charged for the gas or electricity you use – is putting a huge burden on already stretched finances.

Shock bills

Citizens Advice found that the average back-bill amounted to £206, but in some instances people had been charged thousands of pounds out of the blue.

One person who approached the charity for help was billed a whopping £1,120. In this case the supplier had only estimated bills and hadn’t read the meter for five years, but demanded full repayment once it realised its mistake.

The charity was also contacted by a blind man who set up a monthly direct debit as he could not take meter readings. Three years later he received a back-bill demanding £3,500 after the supplier said it had underestimated the monthly payment it set.

Back-billing rules

Back-billing occurs when a household has been undercharged for their energy for a period of time.

In some situations, the customer is at fault, but often the error is down to suppliers underestimating bills or not investigating a technical fault with a meter.

However, there are clear rules on back-billing for domestic energy customers set out by Ofgem.

Suppliers are allowed to back-bill for up to 12 months’ worth of gas or electricity, even if the firm is the one at fault.

However, households can be back-billed for even longer periods if the supplier argues the customer was to blame for the error.

"Customers shouldn’t have to pay for suppliers' mistakes"

Gillian Guy, Chief Executive of Citizens Advice, said: “Customers shouldn’t have to pay the price for suppliers’ mistakes.

“Energy bills are already high so it adds insult to injury when companies go back to customers looking for more money after they got it wrong. Particularly for suppliers who insist on payment in full, this can be a huge burden on already stretched finances.”

An Ofgem spokesperson defended the existing rules: “The back-billing principle means that where the supplier is at fault, customers can only be back-billed for up to 12 months. Our rules also mean that suppliers must take the customer’s ability to pay into account when setting repayments.”