Ofgem outlines new back-billing rules to protect energy customers from extra charges

 
Courtney Goldsmith
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Now customers won't be charged for energy used more than a year ago (Source: Getty)

New protections outlined by Ofgem will block suppliers from back-billing customers on energy used more than 12 months ago.

The industry regulator said back-bills, which tend to occur when suppliers estimate bills before taking a meter reading, can result in large "catch-up" bills for customers.

Suppliers signed a voluntary commitment in 2007 not to back-bill British customers for energy used more than a year ago, but case studies from Citizens Advice suggested the rule was not being applied consistently.

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"Shock gas and electricity bills can throw people’s finances into disarray," said Gillian Guy, chief executive of Citizens Advice.

"We’ve long been calling on the regulator to introduce a mandatory time limit for back bills instead of relying on voluntary action - which suppliers have refused to apply in some cases."

Rachel Fletcher, senior partner of Ofgem said:

Getting billing right is an essential part of customer service, but when things go wrong we want to ensure that all customers benefit from the same protection against back-billing. We cannot be certain that this is the case now under the voluntary commitment.

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The regulator expects the new rule to go into effect this winter, but it is also considering whether to introduce a shorter time limit once smart meters are rolled out.

Citizens Advice recommended the limit eventually be reduced to three months.

Emma Bush, energy expert at uSwitch, said over a quarter of households regularly face large charges out of the blue due to estimated meter readings.

"Putting an end to back-billing on energy used more than a year ago will help protect consumers and encourage suppliers to do more to ensure bills are accurate in the first place. We would also encourage consumers to do their part by submitting meter readings every three months," Bush said.

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