1st March 2016
As many as 2.1 million households could have been hit by large unexpected bills in the last year because energy suppliers initially undercharged them, Citizens Advice has revealed.
In one of the worst cases a blind customer was charged £3,500 because he couldn’t read the meter to supply regular updates.
The consumer group has exposed the extent of back-billing – when energy firms send a revised bill after undercharging – which can arrive unexpectedly and for hundreds of pounds.
Research from the national charity found as many as 2.1 million people could have received a back-bill in the last year.
The average back-bill was for £206 – with 15 per cent of those who had been back-billed saying they were charged more than £250. But some people contacting the Citizens Advice service have reported much larger back-bills. One customer who asked the charity for help was billed out of the blue for £1,120 – the supplier had only sent them estimated bills, had never read the meter over a five-year period and later demanded full repayment.
The charity also helped a blind man who set up a monthly direct debit because he could not take meter readings – three years later he received a back-bill demanding £3,500 after the supplier said the monthly payment had been an underestimate.
Back-billing happens when customers have been undercharged for their energy for a period of time. It can be because a customer did not pay a bill, but often it is due to supplier mistakes like underestimating bills or not investigating a technical fault.
Suppliers can currently back-bill a customer for up to 12 months worth of gas or electricity, even when it was the firm’s fault. But customers can be back-billed for even longer periods – if the supplier argues the customer was at fault.
Billing errors are the number one energy problem people contact Citizens Advice’s consumer service about, with 16,000 cases last year.
Smart meters, which will digitally send regular meter readings to energy suppliers, will be introduced later this year and offered to every home by 2020. Citizens Advice backs the roll-out and says it should ensure bills are more accurate.
The charity says there is an opportunity to reduce the impact of back-billing and calls on Ofgem to either radically reduce the length of time that consumers can be back-billed or prohibit the practice entirely.
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.
“Smart meters provide a perfect opportunity to consign back-billing to the history books. As they are rolled out across the country Ofgem should ensure suppliers reduce the length of time they can back-bill customers.”