Energy companies could be banned from back-billing convenience stores for more than a year’s worth of gas or electricity where suppliers are at fault for accruals.
Only domestic customers have any protection against back-billing for energy used more than 12 months ago but, even then, only from 11 suppliers that signed up to a 2007 voluntary commitment.
Ofgem wants the commitment to be mandatory after deciding that it was being applied inconsistently and it confirmed to C-Store that it was also looking at extending the ban to shops and other small businesses.
It is also considering whether to introduce a shorter time limit on suppliers back-billing customers as smart meters are rolled out.
Back-bills mostly arise when suppliers use estimated bills until they take an actual meter reading which might show energy consumption is higher than expected.
The Association of Convenience Stores (ACS) told Ofgem the nature of convenience retail, with long operating hours, and intrinsic use of refrigeration and other equipment, meant that energy costs were a significant burden and a critical factor in viability.
Rachel Fletcher, Ofgem’s senior partner, said it could not be certain that the voluntary commitment was benefiting all affected customers which was why it had proposed a new enforceable rule to do so as part of suppliers’ licence to operate.
The ACS will welcome the news that Ofgem is looking at imposing a prescribed limit on back-billing and including non-domestic businesses.
Only last week the ACS again called on Ofgem to ensure local shops and other small firms were included in its proposals.
The ACS said suppliers sometimes back-billed business customers for up to five years.
James Lowman, chief executive, said that an unexpected back-bill worth thousands of pounds could be a threat to a convenience stores.
Many energy suppliers have taken positive steps to reduce the impact of back-bills by limiting them to 12 months, as is the case in the domestic sector. However, a number of energy companies still refuse to change their policies and this is simply unacceptable.”
“We believe that local shops and other small businesses should be protected by the same standards of conduct that govern supplier interaction with domestic consumers, and that Ofgem should act swiftly to introduce a licence condition to limit back-billing to a maximum of 12 months,” Lowman said.