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What is Back Billing and Who Could It Affect?

When a letter comes in the post with a red stripe across it, it’s never a good sign, is it? You open said letter and it’s a huge energy bill informing you that you owe your supplier several thousands of pounds. There is no need to panic though, as this guide will take you through the steps of managing this issue and getting it resolved.

Business energy contract due to renew? Call us on 0800 9777 000 or fill in our business quote form to see how much you could save…

What is back billing?

Back billing is when a utility company sends you a bill for energy that you consumed in the past but were not previously billed for. This can happen for a couple of reasons, such as:

An admin error on the utility company’s part

Mistakes happen in life and sometimes you can be on the end of someone else’s. Admin errors aren’t typically common, but they do happen.

If this happens to you, explain to the provider that you are protected by back-billing rules, which prevent suppliers from charging you the full amount and only charging you for any unpaid bills within the last 12 months and nothing after. There will be plenty of options available to prevent you from paying your fee upfront, some of which we’ve detailed in this guide.

A problem with your meter

Not submitting your meter reading may cause issues with your bills. If you do not submit your meter readings then you’ll be charged your estimated billing cost which is determined by your energy supplier. You may end up underpaying for these bills and be back-billed by your energy supplier at some stage.

Damaged or broken meters might also mean you’re being wrongly billed and end up having to pay more at a later date. All of these problems mean back-billing is inevitable.

If you do have a problem with your energy meter then you should do the following to test if your energy meter is working:

✔ The Creep Test
✔ The Load Test

How do you perform the creep test?

  1. Turn off the power in your business by switching off the fuse box
  2. Give it five minutes, then go ahead and check your energy meter. If the reading on your meter continues to increase then your meter is faulty. This will need to be re-tested by your energy supplier and rectified once they’ve confirmed the fault
  3. If the numbers do not increase then it is less likely that there is no fault with the meter. If you cannot work out why your meter numbers continue to increase you should perform a load test.

How do you perform the load test?

  1. Turn off all appliances within your business to prepare for your load test
  2. Begin to turn your appliances back on, one at a time, leaving 15 minutes between each device
  3. Every time you turn an appliance back on to check your energy meter, look if there is a particular appliance that is causing significantly larger increases than other appliances

Who can be affected by back billing?

Any business that consumes energy can be affected by back billing. However, some businesses are more at risk than others. Businesses that are at high risk for energy back billing include:

✔ Businesses with complex energy bills
✔ Businesses with seasonal fluctuations in energy consumption
✔ Businesses that have recently moved to a new location
✔ Businesses that have recently changed their energy supplier

What are the effects of back billing on businesses?

Receiving a back-billing letter can leave you stressed, but what other issues will you be met with when you receive a dreaded back-billing letter? We’ve come up with the below to help prepare you for the concerns you may have, alongside reassurance that these concerns are normal and that we are here to help.

Financial hardship – Back bills can be a significant financial burden for businesses, especially if the bill is for a large amount of energy.

Operational disruptions – Back bills can lead to operational disruptions, such as cash flow problems and late payments to other suppliers.

Damage to reputation – Back bills can damage a business’s reputation and make it difficult to attract new customers and investors.

What are the rights of businesses that are back billed?

Businesses have several rights when it comes to back billing, including the following: You cannot be charged for gas or electricity used more than 12 months ago if you have not been billed correctly. This means that back billing that goes further than 12 months is completely written off. If an energy company disputes this and still demands the full amount you should get on call with Ofgem who will help support your claims.

Businesses have the right to dispute a back bill if they believe that it is incorrect. Utilising this will help you keep any requests from energy suppliers at arm’s length. Again, contact Ofgem to guide you through any process that you might be struggling with.

Businesses can request a payment plan from the utility company if they are unable to pay the back bill in full immediately. Back billing can be expensive, and all businesses can be stung by this happening to them; ensuring that your business can pay back by setting up a payment plan will benefit you long-term.

Back billing can be an incredibly stressful time for businesses, but you can always switch energy providers if you’re unhappy with the way your current supplier has handled the back billing process.

If you want to switch energy providers then you can do so through us here at Exchange Utility. Our expert team will help every step of the way, providing excellent customer service to give you peace of mind.

No standing charge tariff:

There are several things that businesses can do to avoid back billing, including:

Reviewing their energy bills carefully each month to check for any errors or irregularities. Although this might seem like a simple step, you’d be surprised how many businesses don’t check to see if their bills are correct.

Businesses should keep track of their energy consumption so that they can identify any unusual spikes in consumption, which will also allow you to understand when and where your energy consumption comes from. Doing this will help you reduce energy usage in certain areas of your business.

Businesses should report any problems with their meter or billing cycle to their utility company immediately. If you report your issue with the energy company, when a dispute over costs occurs you can point to the fact that you had previously informed the energy supplier of your worry of being overcharged, or back-billed.

Get everything in writing – businesses should get everything in writing from their utility company, such as any agreements or payment plans.

What should businesses do if they receive a back bill?

If a business receives a back bill, it should take the following steps:

  1. Contact their utility company immediately to discuss the bill and to request an explanation. Dispute the bill if they believe that it is incorrect.
  2. Request a payment plan if they are unable to pay the back bill in full immediately. Switch energy suppliers if they are unhappy with the way that their current supplier has handled the back billing process.

If a business is unable to resolve the issue with their utility company, they may need to contact their Utility Regulator in the UK for assistance.

Additional tips for businesses:

  1. Make sure your employees are aware of the risks of backbilling and how to avoid it.
  2. Put procedures in place to help you track your energy consumption and identify any unusual spikes.
  3. Carefully review your energy bills each month to check for any errors.
  4. Keep good records of your energy bills, meter readings, and any communication with your utility company.

By following these tips, businesses can help to protect themselves from the negative effects of back billing.

Looking to compare and switch business gas and electricity suppliers?

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If you have any other questions, take a look at our business energy guides section. Or contact our expert team of business energy brokers who are also available to answer any of your questions about our business gas and electricity comparison services.

Business energy contract due to renew? Call us on 0800 9777 000 or fill in our energy quote form to see how much you could save…