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New rules to protect energy customers from shock bills

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Energy suppliers will not be allowed to back-bill customers for gas and electricity used more than 12 months ago, under new proposals from Ofgem.

Back-bills mainly result from suppliers using estimated bills.

If an actual meter reading shows the customer’s consumption is higher than expected, suppliers send a ‘catch-up’ bill to recover the difference.

This can sometimes result in large amounts being owed.

In 2007 energy suppliers signed a voluntary commitment not to back-bill domestic customers for energy used more than 12 months previously, if the supplier is at fault. Since then, the energy supply market has expanded from 11 suppliers to over 50.

The regulator is concerned the voluntary principle is not being applied consistently and that not all suppliers have appropriate back-billing protections in place.

Citizens Advice has been calling on Ofgem to make a 12 month time limit on energy back-bills a mandatory requirement for suppliers.

The charity’s chief executive, Gillian Guy, said: “Shock gas and electricity bills can throw people’s finances into disarray.

“Often through no fault of their own, people are being hit with large back-bills costing hundreds or even thousands of pounds.

“We helped one person who received a bill for over £3,000 after their energy company stopped taking their direct debit payment but didn’t tell the customer. The firm refused to apply the 12 month back-bill limit, leaving the customer to pay the full bill.”

Rachel Fletcher, senior partner at Ofgem, said: “Getting billing right is an essential part of customer service, but when things go wrong we want to ensure that all customers benefit from the same protection against back-billing. We cannot be certain that this is the case now under the voluntary commitment. We expect suppliers to put their customers first, which is why we are proposing a new enforceable rule to provide this protection.”

Ofgem expects the new rules to go live this winter.

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