By Mark Fairlie

The energy regulator Ofgem has moved to ban “back billing” for energy used over 12 months ago. Gas and electricity suppliers will no longer be able to surprise customers with bills that often amount to hundreds of pounds in “catch-up” fees.

Many gas and electricity customers in the UK pay an average fee for their monthly energy bill based on an estimate from their provider. When the provider receives accurate metre readings, however, they can issue the user with a bill accounting for the ‘actual’ energy used.

It will not protect customers who refuse to cooperate by providing accurate and current metre readings.

What impact does “back-billing” have?

Ofgem says a typical back-bill can stand at around £1,160, but there have been reports of fees of over £10,000. Being hit with a bill of this size when it’s not expected causes significant financial issues for many customers, some of whom fall into debt as a result of the unexpected charge.

The ban starts in May 2019 for domestic customers, and in November 2019 for small businesses, according to the Guardian. Most energy companies are already part of a voluntary agreement to adhere to the scheme and have been since 2007. However, Ofgem’s new regulation will mean that for companies which don’t already abide by the rule, it will now be a mandatory requirement.

Energy companies have been criticised for failing to bill customers correctly in the past, and as Ofgem’s Rob Salter-Church told Sky News,

“it’s unfair that consumers should be left out of pocket when through no fault of their own they’re issued with a shock bill from their supplier.”

Smart energy?

As part of the government’s drive to offer smart meters to every home by 2020, suppliers have been urged to take advantage of the new technology available in order to correctly bill customers.

First generation smart meters were initially introduced in 2009, but there were many teething problems, with many customers finding themselves unable to switch suppliers as their smart meters were incompatible with existing tariffs and reading collection methods.

Ofgem has enlisted the Data Communications Company (DCC) to create a national communication network with which to ensure universally applicable meter reading methods.  This means that new, “second-generation” smart meters will be able to work regardless of a customer’s energy supplier, making switching providers much simpler. Take up has been less than stellar however with 80 installations throughout the whole country.

Picking up the cost

Though energy suppliers are installing smart meters for free, the public is likely to see this reflected in a rise in energy prices. Energy company E.On has already announced a price increase for their gas and electricity customers which could add an extra £97 onto the standard variable tariff each year. This move was described as “monstrous” and a “crippling blow” by online comparison site, as reported in the Guardian.

Smart meters have been touted as the solution for the estimated bills problem, but we can’t be so sure. If mobile phone signals in an area are weak, they’re programmed to return to “dumb” mode – this sends the provider estimated readings, which can be much higher than the actual electricity used.

However, Ofgem’s communications network – developed by DCC – should solve this problem by programming the meters to communicate without the necessity for a mobile signal. This further expands the pool of devices connected to the Internet of Things (IoT) – a growing number of everyday devices capable of internet-aided data transfer.