News

April 21, 2011

Thousands of small firms hit with backdated energy bills

Almost 2,000 small businesses have been charged additional fees on their electricity and gas bills after their energy use was inaccurately estimated last year, government figures have revealed.

A total of 1,848 small businesses (those with less than ten employees) called the government-backed helpline, Consumer Direct, in 2010 to complain after receiving backdated bills.

Energy watchdog Consumer Focus’ head of energy, Audrey Gallacher, said the problem was caused by energy suppliers sending estimated bills and small firms giving suppliers inaccurate readings.

“This is probably just the tip of the iceberg, because a lot of small firms wouldn’t think of going to Consumer Direct,” she said. “Many small firms are unaware that they can be back-billed for up to six years. If they get a bill for thousands of pounds in backdated energy charges it can be very difficult for them to pay.”

Currently, a voluntary code of practice observed by the main energy suppliers means that consumers can only be back-billed for up to one year’s energy usage, but the code does not apply to businesses, nor are there plans to do so.

“We want to see the code extended to cover small businesses, as they do not have the same resources as the big corporations that have experts working on their energy provision,” said Gallacher.

However, she added that there are certain steps small firms can take to ensure they don’t get hit by unexpected bills.

“Small businesses should make sure they do a thorough check when they move into a new premises to ensure there aren’t multiple meters, and make sure they get their details over to suppliers as soon as possible,” said Gallacher. “If they have any queries about any of their bills, they should inform their provider and get them to review it as soon as possible.

“Although a supplier has the right to demand an immediate rebate, if they are hit with a large bill, firms should try to negotiate an affordable repayment plan,” she added.

Federation of Small Businesses energy policy chairman, David Caro, said there was a need for a “radical shake-up of the practice of estimated billing”.

“A large unexpected energy bill, particularly in these difficult trading times, can be as serious as the nail in the coffin for a small firm, which is then forced out of business for no fault of its own,” he said.

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