Back billing is a surprisingly common occurrence, but it has the potential to put you under significant financial pressure when you least expect it.
It’s important to remember not to panic though. There’s a chance you may end up not having to pay your extra bill at all, and even if you do have to, energy suppliers are often very flexible in helping you set up a payment plan.
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Energy back billing occurs when your energy supplier doesn’t bill you correctly the first time round. If you used more gas or electricity than they originally thought, they can send you a bill later to get you to pay the difference. This is why they’re sometimes referred to as ‘catch-up bills’.
The average amount someone pays for gas and electricity in a household in the UK is around £1,250 a year. The average back bill can work out at around £1,160 for a year, meaning it can almost double the price of your year’s energy supply. This can add serious financial pressure on some households, and for this reason, suppliers now have to adhere to stricter rules as to how they go about back-billing (see below).
When energy supply is such an integral part of the normal functioning of our lives today, it seems amazing that suppliers could make what seems like such a simple mistake. However, Ofgem have handed out fines of £53 million for bad billing practices to the Big 6 energy companies alone in recent years, going to show just how common it can be.
If you receive a back bill, don’t panic, you may not have to pay the full amount they are requesting, and if the error was made over 12 months ago, you could be exempt from paying altogether.
There are a number of things that may have caused you to get a back bill from your supplier. The most common reasons for the error in your supplier’s original calculation of your bill are:
If your supplier has the wrong meter number, you could be paying for energy that someone else is using instead of the energy you are using. If this person is using less than you and it goes unnoticed for a period of time, you may have to pay back the difference when your supplier realises.
Most households in the UK pay for their energy on the basis of estimated meter readings. As you might guess, these are often inaccurate. If your supplier consistently underestimates your energy usage and this goes unnoticed for a period of time, you may be back-billed for any extra energy you have used.
Random internal errors are among the most common cause of energy back billing. An example of this is when you are underusing energy and so build up energy credit. It is then sensible to ask for this to be refunded and for your direct debit to be reviewed. Unfortunately, when this happens, your direct debit can accidentally be cancelled. As a result, until this is noticed, you will miss payments which might subsequently be back billed.
There are a set of rules in place that protect energy customers. These rules are instituted under the Ofgem Back Billing Principle. This essentially means that you will not have to pay for any mistakes from over 12 months ago, as long as they were mistakes made by the supplier and not you as the customer. To break it down, if you are sent a back bill due to an error made 12 months ago, you will not have to pay if:
However, you are not afforded protection under this Principle if:
This can be a common occurrence if you are a household that budgets very carefully for their energy bills. Getting an extra charge can be a nasty surprise and you may not have money available to deal with it at the time. Fortunately, energy suppliers are aware of this and are usually quite flexible. They will often let you set up a payment plan that lasts for the same length of time as the period during which the back billed electricity or gas built up.
The first thing to do in this situation is to go directly to your supplier. They will usually have a very specific process for you to follow and you are far more likely to end up not paying your erroneous bill if you follow it.
If this fails, you can contact Citizens Advice on 08454 04 05 06.
You can also contact the Energy Ombudsman that exists to aid customers in situations such as this.