Advice Centre

Issues with Business Electricity Suppliers Back Billing Customers

The Energy Advice Line has backed a campaign by a Coventry MP and retailers aimed at stopping business electricity suppliers from hitting struggling small shops and other users with huge back bills.

Under current laws, suppliers can reissue firms with higher bills to cover billing errors going back up to six years – even when the mistakes were the fault of the supplier.

Labour MP Jim Cunningham has supported the Association of Convenience Stores’ (ACS) fight to limit back billing to one year in line with rules that apply to domestic customers

OFGEM need to act now to give energy users a better deal…

We at the Energy Advice Line agree that the gas and electricity regulator OFGEM need to act urgently to give business energy users a better deal. We have long been calling for OFGEM to do something about back billing. It has been a nightmare for many businesses that suddenly find themselves in debt and their energy supply hastily disconnected, through no fault of their own.

Furthermore, a large outstanding back bill makes it more difficult for these firms to switch suppliers and reduce their energy costs as they cannot move to a cheaper supplier to reduce their costs if they have an unpaid debt with their current supplier. There appears to be a distinct lack of sympathy for these businesses, which is unreasonable given that in many cases, the supplier has made the billing error.

Only give a supplier one year to go back and request more money from the customer…

Business electricity suppliers have made a move in the right direction but again OFGEM needs to make them do better. The Energy Advice Line agrees that a one year limit on back billing is appropriate for all firms and will save them no end of pain.

Research by the ACS found that 36% of independent retailers across the UK had been overcharged for energy in the past year, while more than one-in-four had received backdated bills that left them struggling to stay afloat.

“Energy companies continue to take advantage of small businesses at a time when energy costs are spiralling and competition in the market is failing to work effectively”, Mr Cunningham said.

“I am pleased to support ACS’ campaign and I have personally written to OFGEM calling on them to take immediate action.”

In 2012, energy suppliers developed a set of draft standards that proposed reducing back billing to three years instead of six for the smallest businesses.

However, OFGEM warned that the proposals were insufficiently robust and suggested one year was more appropriate, particularly where the supplier was at fault. It also said the limit should apply to all business electricity users, not just the smallest firms. A report by consumer watchdog Consumer Focus found that in 2010, 40% of all business energy cases handled by the Government advice line Consumer Direct related to back billing. In some instances, businesses faced back bills of £60,000, and if they were not in a position to pay quickly they faced disconnection.

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