Business energy back billing: what the 12-month rule covers

Back billing means a supplier charges you now for energy used in the past, usually because of a metering fault, a missed reading or a billing error. Under Ofgem's rules, suppliers generally cannot back bill domestic and microbusiness customers for energy used more than 12 months ago. Small and larger businesses are not covered by that ban.

Who is protected

Ofgem announced the ban on 5 March 2018, naming domestic and microbusiness suppliers, with the rule taking effect for households from the start of May 2018 and for microbusinesses that November. A parliamentary debate in July 2025 repeated that the limit applies to domestic and microbusiness consumers, not all small businesses.

You are a microbusiness if you meet any one of these:

• fewer than 10 employees AND turnover or balance sheet of no more than €2m;
• electricity use under 100,000 kWh a year;
• gas use under 293,000 kWh a year.

The tests are applied fuel by fuel, so you can be a microbusiness for gas but not electricity. See what is a microbusiness for energy. A business that falls only within the "small business" definition (up to 50 employees, or up to 200,000 kWh electricity or 500,000 kWh gas) can use the Energy Ombudsman, but does not get the back-billing ban.

The rule in practice

For protected customers, the cap runs back 12 months from the date of the new bill. A supplier also cannot charge for older usage if it failed to give you an accurate bill despite you asking for one, or never told you about the charges through a statement of account, or your direct debit was set too low to cover them, as set out by the Energy Ombudsman and Ofgem. You still need to pay accurate bills for energy within the 12 months.

Worked example

A microbusiness uses 500 kWh of electricity a month at an illustrative 27p/kWh, so about £135 a month before VAT. A supplier finds a billing error and says 18 months were never charged.

• Claimed: 18 x £135 = £2,430
• Allowed under the cap: 12 x £135 = £1,620
• Difference you may not have to pay: £2,430 - £1,620 = £810, before VAT

If the same business were not a microbusiness, the cap would not automatically apply, and the supplier's contract terms and general law would matter instead.

When the cap does not apply

You may have to pay for older usage if you acted unreasonably, for example by blocking access to the meter, ignoring payment requests, tampering with the meter or stealing energy. Ofgem says suppliers must judge this case by case. Simply forgetting to send a reading is not treated as obstruction.

What to do if you get a backdated bill

1. Do not ignore it. Ofgem advises contacting the supplier promptly. Accurate bills within the limit are still payable.
2. Check the dates. Work out the earliest date being charged and count back 12 months from the bill date.
3. Ask for a breakdown. Request readings, rates and how the figure was built. Compare with your own meter readings.
4. Look for a cause. Wrong MPAN, estimated reads (estimated bills) or a faulty meter.
5. Put it in writing. State which part you dispute and why. Pay any undisputed part.
6. Escalate. After 8 weeks or a deadlock letter, go to the Energy Ombudsman within 12 months. Your supplier should refund money taken in error.

If a microbusiness bill reaches back further than 12 months and none of the exceptions applies, keep your evidence and challenge it in writing.

If you cannot afford the bill

Tell the supplier early and ask for a payment plan. Business Debtline advises showing you can cover ongoing usage plus something towards arrears. See if you can't pay your business energy bills.

Protecting yourself

• Supply readings regularly.
• Keep bills for at least two years.
• Question any bill that jumps without a reason; see disputing a high bill.

What makes a backdated bill happen

Typical causes include a meter that was never registered to the right account, a missed or wrong meter multiplier, a long run of estimates that are later corrected, or a change of supplier where the old supplier did not send a final bill. In each case the question is the same: when was the energy used, and what has the supplier already told you?

What if you are not a microbusiness?

If you only meet the small business tests, the Ofgem ban does not cover you, so your protection comes from your contract terms, general consumer and contract law, and the Energy Ombudsman, which covers disputes from small businesses as well. Ask the supplier to explain in writing why the charge is valid and how far back it goes. Where the cause was the supplier's own error, say so and ask it to consider a reduction. There is no separate small-business cap that we have been able to confirm, so seek advice if the sum is large.

Some firms qualify as microbusiness for one fuel and not the other, so the answer can differ between your gas and electricity bills.

Evidence that helps

• Dated meter photos and any readings you submitted.
• Previous bills showing what you were charged and when.
• Emails or call notes where you asked for an accurate bill.
• Your direct debit history.

Keeping your bills clean in future

Most backdated bills trace back to missing readings or an account set up wrongly. Take opening readings on the day you take over premises and close readings when you leave. Check your first bill from any new supplier against those photos. Read the meter at the start of each month, and ask your supplier to confirm in writing whenever it changes an account, a meter or a rate. If a smart meter stops reporting, tell the supplier straight away and note the date, because a gap in data is exactly how large correction bills arise. Finally, keep bills and payment records for at least two years so you can show what was charged and when.

Remember that the Energy Ombudsman will look at a dispute only after you have used the supplier's complaints process, and then within 12 months of the deadlock letter, so do not leave a billing problem to drift.

Next steps

Work out whether you are a microbusiness for each fuel, gather your readings and bills, then contact your supplier. For wider help see energy disputes and the Ombudsman and our answer on how far back a supplier can back bill a business.