Ofgem has announced that it will be bringing in legislation which will prevent energy suppliers from back billing their customers by more than 12 months. Back billing is when an energy supplier charges a customer for energy when they discover a fault in previous bills. This usually happens when a supplier has charged a customer for an estimated read, when in reality they have used much more than that.
There has been a previous attempted to prevent suppliers from back billing more than 12 months, in 2007 suppliers signed up for a voluntary commitment, however as this was voluntary it was not regulated and most suppliers have not obliged to it. With Ofgem bringing in the new rules as legislation, it is though that the threat of an Ofgem fine will ensure suppliers stick to the rule.
One of the main driving forces behind the decision by Ofgem was the expansion of the electricity market over the last decade. In 2007 only 11 suppliers operated in the market, with the big six having the majority of the market share. Now there are over 50 suppliers in the market and their share of that market is increasing rapidly. Households and businesses throughout the UK are opting to use smaller suppliers over one of the big six due to complaints about the level of service they were receiving.
It is hoped that this new legislation will give the suppliers the motivation to put more resources into getting the billing correct in the first place, giving the customer an overall better experience.