Back Billing Code of Practice
The energy supply industry is rightly heavily regulated but for new market entrants, the sheer number of rules they need to follow can be overwhelming. In this article, we take a look at the back billing rules for accurate energy bills and the back billing code of practice.
The dreaded back billing scenarios are one of the most common negative stories we see in the media about the energy supply industry, so it pays for new market entrants to be aware of how to avoid it.
What is energy back billing?
An energy back bill - otherwise known as a catch-up bill - is an energy bill given to customers that seeks payment when they haven't been correctly billed for their energy usage.
There are a few reasons why back billing can happen with the biggest one being estimated meter readings that are then proven to be incorrect when updated readings show that a customer has used more energy than they were previously charged for.
Often these issues are spotted quickly, but occasionally they slip through the net and can be lost in an energy supplier’s systems for months. Something that the energy regulator Ofgem greatly frowns upon. When this happens, a supplier will then issue a back bill to their customer who naturally will be surprised and/or angered by receiving a demand for such a payment.
Other issues that can create back billing problems include direct debits being cancelled accidentally which results in energy bills piling up. As well as that customers could also be billed under the wrong meter number meaning they are being charged for somebody else’s energy use entirely.
Also read: Energy Billing – How does it work?
Ofgem back billing rules for accurate bills
Ofgem recognised the issues surrounding Back Billing and created strict rules around it, known as Ofgem's Back-Billing Principle.
To that end, energy suppliers cannot seek extra payment for unbilled energy that was used more than 12 months before an error was detected and a new energy bill issued. This protects consumers from potentially massive back bills but also puts the onus on energy suppliers to get billing right to avoid losing out on money.
A supplier cannot increase direct debit payments or add debt to prepayment meters as a way of clawing back unbilled energy payments as these are covered under the rules.
Energy suppliers must also clearly include back-billing rules in their terms and conditions.
Back billing Scenarios
The back billing rules apply in several scenarios such as if a customer receives an energy bill based on estimated usage and a supplier takes a meter reading that shows over 12 months of underestimation. The back bill in this situation can only be charged for the 12 months and not beyond that.
Another scenario is if for some reason a customer hasn’t received an energy bill for over 12 months (if this happens then something has gone wrong with your company’s billing system) and a customer queries this. A supplier cannot then charge them for a year’s worth of energy and must write off any amount before that date.
Such a situation is not ideal for both customer and supplier. In the supplier’s case they will lose out on income and the customer will undoubtedly be needlessly distressed by the suppliers’ failures likely resulting in said customer switching to a more reliable supplier.
Also read: How can Energy Suppliers reduce Energy Billing Errors
When can a supplier issue Back Bills?
Whilst the rules have been tightened regarding Back Billing in recent years, energy suppliers can issue customers with them when they can prove that a customer has been acting unlawfully by stealing energy or when they deliberately block a supplier’s physical access to a meter without just cause.
In both of those scenarios, the onus is on the supplier to prove the customer is at fault and their behaviour unreasonable.
Energy suppliers can still chase up requests for payments on energy bills if a customer has avoided paying their bill over a 12 month period. If a customer has a payment plan in place to help them repay a debt these are not affected by the back billing rules.
Also read: Helping your customers understand their energy bills
Back Billing shouldn’t happen
In an ideal world, the above examples should never occur, and they don’t need to with the use of technology and software such as Dyball Associates Energy Supplier CRM and Energy Billing software that enables energy suppliers to produce both gas and electricity billing through one platform.
It also provides more accuracy and greater efficiency for energy billing processes.
The main benefits of a CRM include:
- Minimise the need for manual interaction.
- Deliver a seamless customer experience.
- Get things right, first time and avoid back billing issues.
Also read: How a CRM makes Energy Billing easy for Energy Suppliers
Whether you’re looking for electricity and gas systems or support on starting an energy supply company, Dyball Associates Ltd can help.
Further Reading
Top Tips for complying with the Ofgem Electricity Supply Licence Conditions
Are you ready for the new smart meter rollout obligations?
How can smaller energy suppliers be competitive?
Dyball Associates are proud to help new supply businesses successfully launch in the UK market.
Through our energy market consultancy services, and the energy billing software we've developed, we're supporting new UK electricity and gas suppliers get set up and start supplying.
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