Ofgem has warned energy suppliers that their planned changes to improve backbilling arrangements for business energy users are not good enough, and that more needs to be done.

In an open letter to suppliers, the regulator has welcomed the development of ‘draft Standards’ to protect the smallest firms from the impact of backbilling, where customers can be rebilled for a higher amount when the supplier has made a billing error.

In the letter to the Energy Retail Association and ICOSS, Ofgem welcomed the ‘constructive approach’ taken by energy suppliers in seeking a ‘self-regulatory’ solution to the problem.

However, the regulator raised concerns about the time limit on backbilling. Under the draft Standards, suppliers have agreed to limit backbilling to three years instead of the current six-year limit.

Ofgem has suggested that the limit should be one year in line with the protection given to domestic energy users. The regulator said this was particularly appropriate where “there is clear supplier fault”.

Further, it suggested the draft Standards “should be applied to non-domestic customers more broadly”, not just micro businesses.

Ofgem also requested that suppliers should publish, “in the interests of transparency”, all details about cases where business energy users have been backbilled.

It suggested this information should include the number of backbills issued by a supplier over the previous year, the time limits applied for each of these cases and the overall cost of the backbill to the consumer.

Consumer watchdog Consumer Focus has long called for changes to backbilling regulations to give business energy users the same protection as domestic energy users.

It said that last year, 40% of all business energy cases handled by the Government’s advice line Consumer Direct related to backbilling. In some instances, businesses faced backbills of around £60,000, and if they were not in a position to pay quickly they faced disconnection.

Consumer Focus has also raised concerns about the haste in which some suppliers seek warrants to disconnect the power supply of firms that do not immediately pay the back-dated bills.

Julian Morgan, managing director of the Energy Advice Line, the UK’s leading price comparison and switching service for business, welcomed Ofgem’s call for suppliers to give business energy users a better deal on backbilling.

Mr Morgan said backbills stretching back up to six years had been a nightmare for many businesses that had suddenly found themselves in debt and their energy supply hastily disconnected.

“Furthermore, these outstanding backbills have made it more difficult for these firms to switch suppliers and reduce their energy costs,” Mr Morgan said.

“There has been a distinct lack of sympathy for these firms, which is unreasonable considering that in many of these cases, the supplier has made the billing error.

“Suppliers have made a move in the right direction by developing a set of draft Standards, but again Ofgem needs to ensure self-regulation has teeth.”

The Energy Advice Line is the UK’s leading energy price comparison and switching services for business, and enables firms to compare the market for the best possible business energy deals at the touch of a button.

The service has a team of business experts who can give advice about business electricity prices and business gas contracts and how to avoid expensive contract rollovers. For further information visit www.energyadviceline.org.uk

HIGH business energy users will receive £250 million in financial relief to offset the costs of the government’s green energy policies.

In his autumn economic statement, Chancellor George Osborne confirmed that the package of measures were designed to reduce the impact of carbon and energy policies on business energy users that used the highest levels of business electricity, including those in the manufacturing and construction sectors.

The package will be introduced in 2013.

In announcing the measures, Mr Osborne said was concerned about the financial repercussions for industry of UK and European environmental policies, including the EU Emissions Trading Scheme and the carbon floor price.

Mr Osborne announced that the level of relief from the climate change levy on electricity will rise to 90%.  In addition, he said the Treasury would “explore options” for protecting energy-intensive industries from costs associated with electricity market reform.

Industry has demanded financial protection from the costs of implementing a wide range of policies aimed at reducing the UK’s carbon emissions. Green groups, however, have raised concerns that such protections would reduce the pressure on industry to adopt more sustainable forms of energy in the long term.

Mr Osborne’s announcements follow the closure in November of an aluminium smelter in the north-east run by Rio Tinto. The organisation blamed the closure and loss of 515 jobs on new carbon taxes.

Companies such as Tata Steel and Ineos have also warned that UK climate change policies are threatening their operations in the UK and could force them to move abroad. In May, Tata Steel said green taxes were a big factor in its decision to cut up to 1,500 British jobs in Scunthorpe and Teesside.

Mr Osborne said the £250 million package would “keep industry and jobs here in Britain”.

“If we burden [energy-intensive businesses] with endless social and environmental goals – however worthy in their own right – then not only will we not achieve those goals, but the businesses will fail, jobs will be lost, and our country will be poorer,” he said.

Julian Morgan, managing director of the Energy Advice Line, the UK’s leading business electricity prices and business gas prices comparison and switching service for businesses, said any relief for industry was welcome at a time of spiralling business energy prices.

He said it was also critically important for the largest business energy users to ensure they were appraised of the best available deals on the market and ensure they were not paying more than they needed to for their electricity.

“Independent price comparison and switching services are not just for small and medium-sized firms. We have helped organisations with sizeable annual energy spends reduce their bills significantly by comparing the best available business energy tariffs on the market.”

For further information about the Energy Advice Line, or for a free quote, visit www.energyadviceline.org.uk.

Energy supplier E.ON has launched a set of guidelines to ensure that all business energy customers are treated fairly by its sales staff and energy brokers.

The guidelines are in response to energy regulator Ofgem’s recent announcement of plans to improve the behaviour of energy companies when dealing with business gas and business electricity customers.

Ofgem intends to introduce an accreditation scheme for energy brokers, as well as a Code of Practice, which it says will be enforced and financial penalties imposed in cases where the Code is breached.

E.ON has welcomed the announcement of a Code of Practice and said it would work with the regulator on its development. In the meantime, it has introduced its own guidelines to highlight the standards it expects from all parties involved in selling energy to business energy customers.

“It’s time to change the way we do business, as a company and as an industry, “ said Iain Walker, head of SME sales at E.ON.

“We’re committed to driving sales standards upwards and making life easier for our business customers. We believe that customers would be best served by a single independent code of practice, and we would like to work with Ofgem, businesses and the industry to develop this.”

Mr Walker said the purpose of E.ON’s own set of guidelines was to ensure that all parties were ‘fair, honest and transparent’ when dealing with business energy customers.

The guidelines would be aimed to ensuring that businesses were sold the most appropriate and cost-effective business energy contract for their needs, and that full details of products were made clear.

Julian Morgan, managing director of the Energy Advice Line, the UK’s leading energy price comparison and switching service for businesses, welcomed E.ON’s set of principles, but said a single Code of Practice was key.

“Standards need to improve across the industry, and while E.ON’s set of principles is a step in the right direction we believe the only way to deliver a better deal for business energy customers is a Code of Practice,” Mr Morgan said.

“This Code of Practice needs to be developed by Ofgem, business and the energy industry. It also needs to be enforced by an independent watchdog to ensure that it has meaningful benefits.”

The Energy Advice Line is the UK’s only price comparison and switching service exclusively for businesses. It enables firms to quickly and easily search for the best available business electricity prices and business gas deals from its panel of large and independent energy providers.

The service also offers a wide range of advice and guidance on business energy contracts, as well as a free renewal reminder service to help firms avoid being rolled over onto expensive energy contracts.

For further information about the Energy Advice Line’s services, or to obtain quotes or advice, visit www.energyadviceline.org.uk