20/11/2017
Protecting energy consumers from high backbills (UK)
Measures to prevent energy suppliers causing ‘shock and financial hardship’ to microbusinesses and domestic customers by sending them ‘catch-up’ bills for previously unbilled energy they consumed more than 12 months ago have been proposed by Ofgem.
Backbills mainly arise because suppliers issue estimated bills, until a meter reading finally establishes that that the amount of energy being used has been underestimated.
Currently, suppliers voluntarily agree to have appropriate backbilling policies in place.
However, evidence that both microbusinesses and domestic consumers are suffering detriment from backbilling suggested earlier this year that the voluntary agreement was not being applied consistently across the market. As a result, Ofgem proposed in April * to examine the existing regulatory framework governing backbilling.
As a result of the review, ‘Protecting consumers who receive backbills’ proposes the introduction of a licence condition prescribing that suppliers must take all reasonable steps to obtain a non-prepayment meter reading at least once a year and bill based on meter reads. They will also have a general duty to ensure that consumers are provided with accurate information.
The conditions also restrict suppliers’ ability to recover charges incurred more than 12 months ago, whether by direct debit payments or by adding the debt to a pre-payment meter.
The 12 month backbilling limit will apply in all cases, except when there is clear evidence that the fault lies with the consumer. A failure from a consumer to provide a meter reading will not absolve the supplier from the backbilling limit. While the 12 month prescriptive limit will currently apply to smart meters, Ofgem is keeping the option of reducing it as the smart meter roll-out progresses.
Ofgem intends publishing a licence modification decision notice early next year, with changes taking effect 56 days after publication.
* ‘Protection Against Energy Back Billing (UK)’ (CPA News, 7 April 2017)
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