A back bill for energy: the 12-month rule and when you need not pay

A bill for several hundred or several thousand pounds "for previous years" arrives out of nowhere: the supplier has finally read the meter, recalculated and billed you for a period you knew nothing about. In Britain this has a name — a back bill — and there is a rule that usually means you do not have to pay it in full.

What does the Ofgem rule say?

A supplier cannot make you pay for energy used more than 12 months ago if at least one of three conditions applies. First: you have not had an accurate bill for that period before. Second: you were not told what you needed to pay through a statement of account. Third: your Direct Debit amount was previously set too low to cover what you needed to pay.

The last one is the most common. Someone pays their direct debit without fail, assumes all is well, and the supplier — which set the payment below actual consumption itself — sends the difference two years later.

The rules apply to households and microbusinesses alike.

When does the protection fall away?

It falls away if you acted unreasonably. Ofgem gives concrete examples: stopping your supplier from billing you accurately, including by blocking access to your meter; ignoring payment requests from your supplier; stealing electricity or gas.

The practical lesson follows: refusing to let a meter reader in is the worst available strategy. That is precisely what removes the protection.

Where did the rule come from?

Ofgem announced the ban on 5 March 2018. It took effect at the beginning of May for domestic consumers and in November for microbusinesses.

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The figures the regulator used to justify the decision show the scale. The median domestic back bill was £1,160 in 2016/17, based on a random sample of Citizens Advice data from October 2016 to March 2017. The median length of a back bill was 24 months. Extreme cases ran to more than £10,000.

What to do if such a bill arrives

Start with the dates on the bill: which period is actually being charged for. Anything older than 12 months should be checked against the three conditions above.

Then contact the supplier right away rather than waiting for reminders. Ofgem states plainly that where the rules have not been followed the supplier will refund money taken in error. It is also worth contacting them in two other cases — if you think you should not have received a back bill at all, and if you know you will struggle to pay it.

If the supplier keeps asking for payment for a period covered by the rules, you can complain about them.

What not to confuse

The rule does not excuse you from paying accurate bills. If a bill is correct and covers the last 12 months, it has to be paid, and back billing does not come into it. The rule protects you only from charges for long-past periods you were never told about in time.

Second: the 12 months run from when the bill was issued, not from when you opened the envelope. Letters from a supplier are not worth leaving unopened — the date you read it will not help you in a dispute.

What to do in advance

Submitting meter readings regularly is the only way to avoid a situation where the supplier is billing on estimates. Every few months it is worth comparing your direct debit against actual consumption: if the payment is noticeably lower, the difference builds up and arrives one day as a single bill.

Keep bills and statements for at least two years. In a back-bill dispute, proof that no accurate bill was issued for the period is your own archive.