Energy firms ordered to improve their billing

Energy suppliers must improve the way they bill their customers within a year or face regulatory action, industry regulator Ofgem has warned.

Ofgem has ordered suppliers to stop ‘back-billing’ – failing to supply a bill and then charging customers the full amount at a later date - beyond two years. This would be reduced again to one year in 2007.

The regulator also said that an independent body with the power to award compensation, must be established and that energy suppliers had to review their domestic customers’ contract terms to ensure compliance with consumer rights legislation.

Ofgem chief executive Alistair Buchanan said: “For the vast majority of customers, the energy market works well. But suppliers can get things wrong and when they do, this can cause customers real distress and hardship.”

The billing improvements follow an Ofgem investigation into a ‘super complaint’ about billing from consumer body, Energywatch. Ofgem said that it found no widespread failure of billing arrangements in the industry, which managed 47 million customer accounts and delivered 200 million bills a year. However, Ofgem said that, although billing complaints were relatively low, Energywatch still reported 39,000 complaints in 2004. Ofgem said that it found that a relatively small number of customers suffered “real harm” when companies made billing mistakes.

If suppliers fail to deliver the three steps Ofgem requires, the regulator has the powers to introduce license conditions, which will force the companies to make the changes. If the suppliers fail to adhere to license conditions, they can face enforcement action or financial penalties.

Mr Buchanan added: “Good billing is vital because it allows customers to be energy smart about how much energy they use and how much they are paying for it. The measures outlined today by Ofgem will improve billing standards for all customers, however, the competitive market also allows customers to punish poor service by switching supplier.”


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