A catch-up bill for energy you used a year or more ago can knock a small business sideways. The good news? If your business counts as a microbusiness, your supplier can’t charge you for energy used more than 12 months before the date of the bill, unless you’ve already been billed for it correctly or you’ve acted unreasonably. And if one lands on your desk, send it to us: we’ll check it and take it up with the supplier for you.
Key points
- The 12-month rule: Microbusinesses can’t be back billed for energy used more than 12 months before the bill date.
- Readings don’t count against you: Not sending meter readings doesn’t, on its own, cost you the protection.
- Don’t pay it, and don’t ignore it: Send a catch-up bill to us first and we’ll check it against your rates and readings.
- We do the chasing: Our bill validation takes errors up with the supplier, so you’re not arguing it alone.
Where Do Catch-Up Bills Come From?
A back bill is a “catch-up” bill: one your supplier sends when you haven’t been charged correctly for the energy you used. They usually come from one of two places. Either the supplier’s billing system has gone wrong, or you’ve been on estimated bills that a later meter reading shows were too low.
Imagine you run a florist. Your shop has been billed on estimates for two years because the meter sits behind a locked door in a shared corridor. A meter reader finally gets in, the reading is far higher than the estimates, and a bill arrives covering the whole two years. Without the 12-month rule, you could be asked to pay all of it in one go, right in the middle of your busiest season.
That’s exactly why the energy regulator, Ofgem, banned suppliers from back billing beyond 12 months. The ban was announced on 5 March 2018, the rules for households started that May and the rules for microbusinesses followed in November. The protection sits in the gas and electricity supply licences as Standard Condition 21BA.
We’d much rather you never needed it, of course. Regular readings and properly checked bills stop a catch-up bill building up in the first place, and that’s where we come in.
How Does the 12-Month Rule Work?
The 12 months are counted back from the date on the bill, not from when you used the energy. So if a catch-up bill is dated 1 October, the supplier can only charge you for energy used from the previous 1 October onwards. The limit covers standing charges as well as the energy itself.
You don’t have to pay for energy used more than 12 months ago if:
- No accurate bill: You haven’t had an accurate bill for that energy before.
- No statement of account: You weren’t told what you owed through a statement of account.
- Direct Debit set too low: Your Direct Debit was previously set too low to cover the charges.
Not giving meter readings doesn’t count against you. Missing a meter reading doesn’t make you obstructive or unreasonable in Ofgem’s eyes, and suppliers are expected to take readings themselves if they don’t get them. That said, regular readings are still the simplest way to keep your bills honest, and a dated photo of the meter settles most arguments before they start.
Is My Business Covered?
The 12-month rule applies to households and microbusinesses. A microbusiness is a business that employs fewer than ten employees (or FTE equivalent) and has annual turnover or balance sheet of not more than £2 million; or consumes not more than 293,000 kWh of gas per year; or not more than 100,000 kWh of electricity per year. Plenty of shops, cafés, offices and small workshops fall inside one of those.
If your business is bigger than that, the back billing rule doesn’t cover you. That’s when checking every bill as it arrives really counts, and it’s exactly what our bill validation is for: we check each one against your agreed contract rates and recorded consumption, so a problem is caught in month one rather than month twenty.
There’s one main exception for microbusinesses. You will have to pay for energy used more than 12 months ago if you’ve acted unreasonably, for example by blocking access to your meter, ignoring payment requests, tampering with the meter or stealing energy. Suppliers have to look at each case on its own facts, and they can still chase bills they correctly sent you before.
A Back Bill Has Landed: What Should You Do?
Don’t pay a catch-up bill straight away, and don’t ignore it either. Send it to us. We’ll check the dates it covers and the meter readings it’s based on, the same figures you’d look for when you read your business energy bill, and ask the supplier for a breakdown of how the charges were worked out.
If the bill reaches back more than 12 months and your business is a microbusiness, we’ll tell the supplier it breaks the back billing rules. If a supplier has taken money it shouldn’t have, it has to refund it. In the meantime, take a dated photo of the meter today so there’s no argument about the current reading.
Has a bill ever landed that you simply couldn’t make sense of? You don’t have to work it out on your own. We check your bills against your agreed contract rates and recorded consumption, look out for the warning signs of a suspicious energy or water bill, and take up any errors with the supplier for you.
What If the Supplier Won’t Put It Right?
If you’re a micro or small business with a broker, your broker should be your first port of call. If you’re with us, that’s our job: we’ll take the error up with the supplier for you.
If it still isn’t resolved, the Energy Ombudsman can step in once the supplier has had 8 weeks to deal with the complaint, or sooner if it sends a deadlock letter (a letter saying it can’t resolve the complaint any further). The service is free for microbusinesses and, from 19 December 2024, for small businesses too. For the Ombudsman, a small business is a business that employs fewer than fifty employees (or FTE equivalent) and has annual turnover of not more than £6.5 million; or a balance sheet not greater than £5 million; or consumes not more than 500,000 kWh of gas per year; or not more than 200,000 kWh of electricity per year.
If it finds in your favour, the Ombudsman can tell the supplier to put things right, apologise or change how it works, and it can make financial awards of up to £20,000.
What Does This Mean for Your Business?
A back bill is stressful, but it’s rarely the end of the story. Catch-up bills are exactly the kind of problem our customers bring us, and here’s how we help:
- Bill validation: We check each bill against your agreed rates and recorded consumption, and take up errors with the supplier, so a back bill gets questioned properly.
- Better contracts: When it’s time to renew, we compare business electricity prices and gas prices for you and give you a written selection of the options that best suit your business.
- Renewals on time: We always advise arranging your next contract as early as possible, normally 12 months before your renewal date, and our retentions team keeps your end dates on record.
- Accountable to you: We’re members of an alternative dispute resolution scheme with the Energy Ombudsman. We’re also members of the Energy Consultants Association (ECA), which is a trade association.
Final Thoughts: Don’t Face a Back Bill Alone
The 12-month rule gives microbusinesses real protection, but the best catch-up bill is the one that never arrives. Regular readings and properly checked bills see to that. If a large or unexpected bill has landed, send us a recent bill and we’ll take a look, book a call with our Energy Team, or ring us on 01273 914000. It doesn’t matter if you’re not already working with us. No pressure, just straightforward advice from people who know what to look for.