Energy suppliers are to be banned from back-billing customers for gas and electricity used more than 12 months ago under new rules from Ofgem.
Such charges, on average totalling £1,160 but in extreme cases more than £10,000, can arise due to problems with a supplier’s billing systems or incorrect usage estimates, the regulator said.
The new rules will come into effect in May for household consumers and in November for the smallest businesses.
Suppliers would still be able to recoup the money beyond the 12-month period if customers have behaved unreasonably, such as by blocking access for meter readings.
Rob Salter-Church, Ofgem’s interim senior partner for consumers and competition, said: “Large catch-up bills can leave consumers struggling financially or even in debt to their supplier.
“Getting billing right is an essential part of customer service and 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.”
Many suppliers have already voluntarily agreed not to back-bill customers past 12 months, but this does not cover the whole market and Ofgem said those that have signed up did not always follow the agreement.
The announcement comes amid sustained political scrutiny of the energy sector and a week after controversial plans for a law to cap bills were introduced to Parliament for the first time.
Centrica, owner of largest supplier British Gas, has said that the cap was one reason why it had decided to shed 4,000 jobs by 2020.
Separately, E.ON – another one of the Big Six companies that dominate the sector – announced last week that it was removing a number of discounts to customer bills from April as part of efforts to make tariffs easier to understand.