Financial Agony Uncle: Seeking Solutions
Are you facing financial distress? Reach out to Paul Lewis, our experienced financial agony uncle and broadcaster.
Is there a financial question you’ve always wanted to ask but felt unsure about? Do you need clarity on your rights in a particular situation? Have you experienced a scenario where you believe you’ve been unfairly treated or overcharged?
Paul is here to assist you.
While he cannot address individual cases or compel companies or the Government to act justly, he invites you to send your inquiries regarding financial concerns to [email protected]. He will respond to some of these questions in his column. Remember, this is your column, so don’t hesitate to submit your questions.
Bob from East Anglia writes (again):
It seems that trouble never comes alone. I’ve recently received a staggering bill for £3,203.38 from my electricity supplier, who claims I haven’t paid for this amount, despite having my direct debit payments set up for decades. I’ve been informed that they plan to deduct this amount soon. I understand you don’t provide personalized responses, but could you share a standard reply to situations like this?
Paul replies:
Poor Bob! The “rain” you mentioned was likely the necessary funds for urgent repairs and renovations on your long-time family home. In my column two weeks ago, I suggested a couple of protective measures to help you weather the storm.
However, you have now been inundated by a deluge from your energy supplier. You were informed that they would take £3,203.38 on March 10 – just over a week after your initial inquiry. This amount is understandably alarming, as most people cannot fathom such a large sum being withdrawn from their accounts all at once.
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You are a victim of what is commonly referred to as back billing. It’s essential to know that energy suppliers, both for electricity and gas, cannot bill you for energy consumed more than twelve months prior. This practice was prohibited by the energy regulator Ofgem in May 2018 to protect consumers from unexpected financial burdens. Nonetheless, many suppliers appear to have overlooked this regulation.
Last year, tens of thousands of individuals faced similar back bills, with over 3,000 complaints lodged with the energy ombudsman that covered all five major suppliers fairly evenly. The frequency of these hefty bills seems to be exacerbated by ongoing inaccuracies within the billing process. In fact, more than 60,000 individuals sought assistance from Citizens Advice regarding energy billing errors last year.
Interestingly, many of these substantial bills arise after smart meters are installed, but you had opted against having one. When you contacted your provider (one of the leading five suppliers), you described how they “spouted a load of nonsense” about your failure to provide readings since 2022, billing you for those periods. This was despite your insistence that their own representative had read the meter last July and you had submitted estimates!
To reiterate the critical rule: if you receive a bill for energy consumed over twelve months ago and this is the first billing for it, you are not obliged to pay. Back billing is explicitly banned. Period. Therefore, all the justifications offered by your supplier would not have held up, even if they were accurate—which they were not. The only legitimate reasons to bypass this rule would be if a bill was sent within twelve months of the usage or if the customer exhibited “obstructive or manifestly unreasonable behavior.” Clearly, you did not.
This rule is outlined in the licensing conditions for both electricity and gas suppliers. If they violate this rule—specifically, clause 21BA—they are in breach of the conditions under which Ofgem permits them to sell energy. This could lead to fines or even the revocation of their operating license. However, to date, no supplier has faced penalties for back billing, which may encourage such practices.
Equipped with this knowledge, you confronted your supplier, and to your surprise, you reported: “wondrous result, they have acknowledged it was a mistake, they failed to account for the payments I made, so the new bill will reflect a credit balance and the £3,203.38 bill has been cancelled. Thank you once again.”
The occurrence of such errors is perplexing. The back billing rule is so straightforward that it could be summarized in twenty words. You could easily fit the correct protocol on a Post-it note and stick it on the screen of every customer service representative:
- Was the energy used more than 12 months ago?
- Is this the first time you have been billed for it?
- If yes to both, apologize and cancel the bill.
Even more baffling is why these bills are issued in the first place. The rule to prevent them could be encoded in a few lines of computer programming. Yet, it appears this has not been executed properly, as bills like yours—and countless others—continue to be sent out.
Dhara Vyas, the chief executive of Energy UK, the trade body for energy suppliers, mentioned on Money Box on BBC Radio 4 that there “may be some systemic issues we aren’t aware of.” Bill Esterson MP, chair of the Commons Energy Select Committee, deemed back billing “outrageous” and demanded accountability from Ofgem, which will present before his committee next week.
Even Ed Miliband, the Secretary of State for Energy Security, intervened, urging Ofgem’s chief executive Jonathan Brearley in a letter dated February 18 to “challenge unlawful back billing.”
However, you still received your £3,203.38 bill. So, what can you do if you find yourself in a similar predicament?
If you receive a bill for electricity or gas used over twelve months ago and it is the first bill you’ve received for that usage, reach out to your supplier. Remind them that back billing is in violation of license condition 21BA and that the bill must be cancelled. If they continue to refuse, consider canceling your direct debit to prevent them from withdrawing the funds and file a complaint with the energy ombudsman at energyombudsman.org.
Keep me updated on your progress.
