Read on to learn just what a backdated energy bill is, as well as when you might receive a backdated gas or electricity bill with Business Energy Comparison.
How Long Can An Energy Supplier Backdate An Energy Bill?
The short answer? An energy supplier may chase you for an unpaid energy bill for just 12 months. If you have not been correctly billed, the energy supplier is not entitled to charge you for backdated energy bills going any further back than one year. Essentially if the energy supplier made a mistake, they have exactly one year to sort it out.
Backdated energy bills can be worrying for some customers. But the good news is that there are back billing rules in place to prevent too many nasty surprises.
Within this guide, we will detail why energy prices are rising and what your options are.
What Is Backdating?
The term backdating, or back-billing refers to dating a bill or legal document with a past date. As in, serving the consumer with a bill relevant to a previous month, or year. For an energy company serving a back bill is not illegal. But the energy supplier must carefully follow the back billing rules laid out by Ofgem.
For the protection of domestic and business consumers, back billing rules make it so the energy supplier is only entitled to chase energy bill payments from within the past 12 months. Provided, of course, that they were at fault. If they made a mistake over a year ago, it’s their loss.
Backdating In Relation To Your Energy Bills?
Backdating (or back billing) by energy companies refers to the scenario where a gas or electricity supplier failed to send out accurate bills and has accidentally undercharged you for the gas or electricity supply. Basically, you paid too little, and now you need to make up for it.
Fortunately, since it is the energy company that was at fault, back billing rules apply to protect you from spiralling suddenly into energy debt. If you have any reason to doubt your energy company or worry that back bills are tumbling through your letterbox too frequently, compare energy suppliers with Business Energy Comparison.
Keep in mind that backdating, or back billing, is when the supplier failed to correctly charge the customer for their energy usage and is attempting to make up for it. The energy supplier chasing you for an unpaid energy bill served correctly and on time, is not a back bill.
Back billing is fairly common, especially for domestic or business energy customers who pay via direct debit or base their payment plan on meter readings. If you always pay the same amount, but one month you go a little over that typical energy usage, you might find the cost of the extra energy added to your bill the following month.
How Long Can An Energy Bill Be Backdated?
Back billing refers to a mistake made by the energy company, but back billing can only account for mistakes made within the past 12 months. This is due to a ruling introduced by Ofgem in April 2018. This means that if the energy supplier made a mistake and undercharged you more than a year ago, they are unable to serve a back bill.
Ofgem’s back billing regulations from April 2018 ensure that if a mistake goes unnoticed for several years, the energy company is not eligible to claim back more than 12 months’ worth of money owed. Imagine if you were underpaying for, say, five years. Then one day, you receive a catch-up bill for all five years of energy in one go. Fortunately, that cannot happen.
As an energy consumer, if you receive a back bill it is worth checking to see how long ago the charges have been backdated. This is especially apt for small businesses or micro-businesses, who are less able to be careless with what is given to energy suppliers. It might be that the back billing refers (at least in part) to charges older than 12 months, which are therefore void!
Up to six years
Customers would be mistaken to assume that all unpaid energy debt will be written off after just 12 months. If a consumer, be they domestic or business, has been correctly billed for energy use but has failed to pay, the energy supplier is entitled to chase payment for as many as six years.
That’s right; back billing only refers to a scenario where there has been an omission on the part of the energy company. If the consumer is at fault, you can expect the energy supplier to continue to chase payment or send you a bill for energy use within the past six years.
The back billing regulations do not apply if, for example, the energy consumer has failed to supply regular meter readings, or has in any way obstructed one or more meter readings. The omission needs to be entirely the fault of the energy supplier, for the consumer to be protected and have the 12-month rules apply.
Why You Might Receive A Backdated Energy Bill
The energy company is ultimately responsible for issuing accurate gas and electricity bills, and most of the time they manage to charge customers the right amount. However, the need to backdate a bill is not uncommon.
The most common cause of back billing is if there have been one or more inaccurate meter readings, or your direct debit payment has gone awry. This can happen to users of both business and home energy.
Estimated meter readings
Many households and small businesses pay their energy bills based on estimated meter readings. This might seem like the quick and easy way to approach it (because who wants the hassle of manually checking the meter every month, right?) but for a month where you use a little more energy than normal, this can lead to an undercharge.
No, an undercharge is not something to celebrate. An undercharge will lead to a back bill.
Incorrect meter readings
Much the same as above, but this scenario refers to when a meter reading has been taken manually (you know, the old-fashioned way) but recorded incorrectly. Or perhaps, the meter itself is displaying an incorrect energy use.
If you have cause to think your meter reading might be too high or too low, contact your energy supplier and ask them to confirm. If you continue to believe you are using more energy than your meter says (or less) it is worth investigating whether the meter itself might be faulty.
Paying for the wrong meter number
It happens. Due to an administrative error, usually by the energy suppliers, you might find yourself paying for someone else’s meter instead of your own. If this happens you might be paying for either more energy than you have used or less.
If you are paying for less energy, you can expect the other party to solve the mystery and when they do, you will receive a back bill from your energy supplier.
Cancelled direct debit
Many domestic and business customers choose to pay their energy suppliers by direct debit. This is fine, for the most part. Many energy supplier companies charge a more competitive rate if you agree to pay by direct debit. That being said, direct debit is prone to administrative errors.
It might also be accidentally cancelled. If you have changed bank details or queried your direct debit, it might have been automatically cancelled. This will result in an underpayment, which your energy supplier will rapidly rectify when they figure it out.
What If You Can’t Pay?
If you receive a back bill and it comes as a nasty surprise that you simply cannot pay right now, get in touch with your energy supplier right away. Most energy companies will try to help you out and devise a fair payment arrangement or repayment plan so you can spread the cost thinly without racking up additional debt.
In extreme cases where the domestic or business energy user is unable to reach an agreement with the energy company, the right thing to do is to get in touch with the Citizens Advice Bureau and find out just what options are available.
If your energy supplier is unwilling to help you, consider switching lest this happens again in the future. You can find the ideal business electricity comparison, and compare business gas prices at Business Energy Comparison.
How To Avoid A Back Bill?
The easiest way for any consumer to avoid getting that nasty back bill surprise is to take an accurate monthly meter reading and never, ever base your payment on an estimate. The thing is, the energy company will most likely figure out whether you have been accurately charged sooner or later, so pay now, and avoid that added cost later on.
It is also a good idea to confirm that all bank details are correct and that any direct debit payment is being taken at the right intervals throughout the year.
Smart meter readings
Smart meters are gradually working their way into domestic and commercial UK properties and, while there might not be a legal obligation to change right now, it could save you time and a little money to do so.
A smart meter reading is automatically sent to the energy company regularly. This means you do not have to check the meter yourself or wait for someone else to do it either. Sure, you might still receive an inaccurate charge once or twice, but with a smart meter, the likelihood is greatly reduced. No inaccurate reading means no sudden back bill!
In Conclusion
An energy supplier is entitled to backdate an energy bill for as long as 12 months following an underpayment. Undercharging happens, most often due to an incorrect meter reading or clerical error. This is no cause to celebrate, however. The energy supplier will figure it out and send a catch-up bill for the amount owed.
On the plus side, provided you have not wilfully avoided payment or obstructed a meter reading in any way, the energy supplier only has 12 months to chase that payment. The Ofgem back billing regulations prevent the energy supplier from chasing money owed more than a year ago so long as the error was their fault.
If you do receive a back bill, try not to panic. Contact your energy supplier and ask about a payment plan. Most often, the amount owed will not be due up front but instead spread across, for example, the next 12 bills.
The key takeaway? Provided you have no part in the error, you are only chargeable for the past 12 months. Even if you have been undercharged for more than that, if the mistake is down to the energy supplier, you will only be expected to pay for the last year’s energy.
Frequently Asked Questions
According to billing rules, how far back can utility companies bill you?
An energy company may send you a catch-up bill for energy use within the last 12 months, provided they failed to conduct accurate billing in the first place. If the error, or failed payment, is the fault of the customer, the energy company may chase the money owed for as long as six years.
Does backdating apply to stolen gas and electricity?
The rules for back bills do not apply to any consumer caught stealing gas and electricity. In this case, the energy supplier is entitled to charge for stolen energy and since there was no mistake on their part, the back bill regulations do not come into play.
What if you pay too much?
Yes, this can happen too and when it does, both business and domestic customers are entitled to a refund for any amount overpaid on energy bills. Perhaps you have moved property, or else you were the other party in the wrong meter mix-up. Whatever the reason, if you think you might have paid too much, ask your energy supplier to double-check.
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