Back Billing

The law applicable to back-billing is the 1980 Limitations Act. Under this act, the upper limit of any claim is 6 years for a "simple" contract (of which an energy supply agreement would qualify). In other words, your energy supplier cannot claim money owed for any back billing in excess of 6 years, according to UK legislation.

Clearly, these rules do not provide much protection for businesses.

Indeed, the energy industry itself took steps to make billing back fairer for' businesses.

Energy UK, the Gas and Electricity trade association and energy suppliers, has introduced an additional set of voluntary standards for micro-enterprise energy customers back-billing. (They do not apply to large companies) The rules currently apply to those energy suppliers that have signed up to the voluntary billing standards of Energy UK are:

• Your electricity supplier may reimburse your business for mistakes made as long as three years ago ;
• your gas supplier may be reimbursed for mistakes made as long as four or five years ago ;
• you may be reimbursed even if the miscalculation was the mistake of the energy supplier rather than yours ;
• Your energy supplier may require you to reimburse them immediately.

Some business energy suppliers have gone beyond this and sometimes for as little as 12 months have limited their rights to claim money under a back bill. See what your supplier offers to find out the policy your business energy supplier is operating? section below.

Furthermore, the standards of Energy UK say suppliers should:

• take regular meter readings;
• make it easy for you to give meter readings;
• help you understand how to get accurate bills;
• make your payment options clear if you do get sent a back bill and let you know where you can get independent advice;
• treat you fairly, taking into account your circumstances and let you know your rights;
• act as soon as they discover an issue with your account, and if possible, contact you before they send the back bill;
• Limit any electricity back bill to three years and gas to five years if the mistake wasn’t your fault.

However, in some cases, the suppliers themselves also voluntarily went beyond this to offer their micro-business customers greater protection. This approach is patchy, however, and so it pays to know what the policy of your supplier is. Our guide below outlines each supplier's current policies

• British Gas Business is signed to the Energy UK standards and currently limits micro-business back billing to 2 years; this will be reduced to one year before the end of 2014. Limits apply only after all that can be done by the customer to avoid back billing and where the supplier or industry processes are at fault.
• CNG does not comply with the UK Energy Standards. A back bill may be issued in effect under the Limitations Act for up to 6 years after the event.
• Corona Energy is subscribed to the Energy UK standards and limits micro-business billing back to 4 or 5 years for gas and 3 years for electricity.
• DONG Energy Sales is signed up to the Energy UK standards and currently limits micro-enterprise billing back to 2 years where it is at fault; Dong considered a reduction to 1 year in 2014 but this move was not confirmed.
• Dual Energy does not comply with the UK Energy Standards. A back bill may be issued in effect under the Limitations Act for up to 6 years after the event.
• Ecotricity does not comply with the Energy UK standards, but limits billing to 2 years for all undertakings when the party responsible for the miscalculation is responsible.
• EDF Energy has signed up to the Energy UK standards and limits back billing to 3 years for micro-enterprises and "EDF-defined SMEs." By the end of 2014, EDF committed to reducing this to 1 year.
• Extra Energy does not comply with the UK Energy Standards. In effect under the Limitations Act, a back bill can be issued for up to 6 years after the event.
• E.ON has signed up to the Energy UK standards and limits billing back to 1 year for all SMEs including micro-enterprises.
• Gazprom Energy has signed up to the UK Energy Standards and limits micro-business billing back to 4 or 5 years for gas and 3 years for electricity.
• Haven Power does not comply with the UK Energy Standards. A back bill may be issued in effect under the Limitations Act for up to 6 years after the event.
• Hudson Energy is not in compliance with the UK Energy Standards. A back bill may be issued in effect under the Limitations Act for up to 6 years after the event.
• nPower has signed up to the Energy UK standards and limits back billing for micro-enterprises to 2 years and committed to a one-year reduction in 2014.
• Opus Energy is signed up to the Energy UK standards and currently limits billing to one year For all SMEs, including micro-enterprises
• Ovo Energy is not in compliance with the UK Energy Standards. A back bill may be issued in effect under the Limitations Act for up to 6 years after the event.
• Scottish Power is subscribed to Energy UK standards and currently limits micro-enterprise billing back to 2 years; this will be reduced to one year in 2014.
• SSE is subscribed to the Energy UK standards and limits micro-business billing back to 1 year. By the end of 2014, SSE will be extending this to all SMEs.
• Total Gas and Power complies with the Energy UK standards and limits back billing for micro-enterprises to four or five years for gas and three years for electricity.

The restaurant cut-off after getting a backdated bill for £18,000

According to this case study from Consumer Focus, the owner of a small restaurant in Surrey was sent a backdated bill for £ 18,000 and was disconnected for two weeks due to mistakes made in calculating their bills over five years.

When the owner got the backdated bill for £ 18,000, she couldn't understand what had happened because meter readings had been taken and she had always paid her bills regularly and fully, she thought everything was in hand and hadn't seen any reason to double-check.

Readers were reading their meter as a five-digit meter, rather than a six-digit meter, which meant that all of their bills had been miscalculated for five years and a substantial debt had been built up.

The business had no cash flow needed to pay £ 18,000 in one go, so the proprietor was trying to negotiate a repayment scheme. This supplier made an initial offer of about £ 1,900 a month which the proprietor thought was too much, so the talks continued to go back and forth for a couple of months before an 18-month repayment scheme was lastly decided. But only one week later, The electricity was disconnected and the owner was told to pay £ 20,583 (back bill amount plus disconnection charges and £ 1000 deposit) for reconnection.

The owner went to her bank and found the money, but it was three weeks before she was reconnected and she lost an estimated £ 15,000 in takeovers.

Take monthly meter readings

Here are some tips to make sure you don't get paid back, but they're not just about stopping backdated bills, they're also good practice that all companies should attempt to follow to make sure you get precise bills.

Scrutinize your bills

Check that it is based on actual meter measurements rather than estimates, ensure that the unit rate and standing charges are right and look for bills that are greater or lower than ordinary. Call your energy provider straight away if there is anything uncommon-the longer you leave it, the harder it will be to sort it out, and the greater the potential back charge. And of course, if you don't get a bill, don't be happy that you don't have to pay, let your provider know and prevent the need for a enormous invoice to catch up.

Take extra care when moving premises

If you are leaving company premises, make sure that you read a final meter at your ancient premises and open it at the new premises and send it to your energy provider. See our moving premises guide for more information. What if you receive a back bill?

Call your energy supplier straight away if you get a backdated bill, don't just acknowledge it. Have the vendor clarify why you were billed back and ask them to double-check all the figures. (Energy providers are now and again known to create errors).

You should also make sure they don't bill you for more than they lay down in their guidelines. (See above for breakdown of supplier by supplier).

Try to negotiate a repayment scheme with the energy provider if the back payment is precise if you are not in a situation to pay all at once. Get them to clarify if you are at danger of being disconnected and working with them to prevent these at all expenses.