How far back can a supplier back-bill a business?
If you are a microbusiness, your supplier generally cannot charge you for energy used more than 12 months before the bill date where the error was theirs. Small and larger businesses are not covered by that Ofgem rule, so longer back bills are possible and worth challenging.
A back bill is a bill for energy you used in the past that was never charged, or was charged too little. It usually appears after a supplier finds a wrong meter reading, a meter that was never recorded properly, or an estimate that turned out far too low.
The 12-month rule for microbusinesses
Under Ofgem's back-billing rules, which sit in suppliers' licence conditions, a supplier cannot make a microbusiness pay for energy used more than 12 months before the bill, if the supplier never gave you an accurate bill for that energy, never told you what you owed, or your direct debit was set too low to cover it. Ofgem announced the ban on 5 March 2018, saying it would cover households from that May and microbusinesses from that November.
It applies per fuel. You can be a microbusiness for gas but not for electricity, depending on how much you use. Check where you stand in our guide to what counts as a microbusiness.
Who is not protected
Ofgem's ban covers households and microbusinesses only. If your business is a small business (for example, using more than 100,000 kWh of electricity a year) the 12-month cap does not apply automatically. Your supplier may try to recover a longer period, although you can still challenge the bill, ask how it was worked out and complain if the delay was the supplier's fault.
When the supplier can still charge you
Ofgem says you may have to pay for older energy if you acted unreasonably. Examples it gives are blocking access to your meter, ignoring payment requests or stealing energy. A genuine supplier mistake you could not have spotted is not in that list.
Worked example
A café's meter was wrongly recorded, so the supplier undercharged by about £150 a month. The supplier spots the error after 20 months and issues a back bill.
- Full undercharge: 20 × £150 = £3,000
- Within the 12-month limit: 12 × £150 = £1,800
- Not recoverable from a microbusiness: £3,000 − £1,800 = £1,200
These figures are illustrative only. The real amount depends on your usage and rates.
What to do if you receive a back bill
- Do not ignore it. Contact the supplier straight away and ask for a full breakdown: the period, readings used and rates applied.
- Check whether the period goes back further than 12 months and whether you are a microbusiness for that fuel.
- Ask for any charge outside the limit to be removed and any money taken in error refunded.
- Offer a payment plan for the valid part if you cannot pay at once. See payment plans for business energy.
- If the supplier will not budge, complain in writing, then take it to the Energy Ombudsman after eight weeks or a deadlock letter. Our page on energy disputes and the Ombudsman explains the steps.
Submitting regular meter readings is the best defence. It stops estimates drifting and shrinks any future back bill. See how often to submit readings.
Common mistakes to avoid
- Paying without checking. Many people pay a back bill in full because it looks official. Always ask for the breakdown first.
- Assuming you are a microbusiness. Count your annual kWh for each fuel separately.
- Waiting. Complaint time limits at the Ombudsman run from the supplier's final response, so keep every letter.
If your back bill is for a previous tenant's period, that is a different problem; see who pays if the previous tenant left energy debt.
Next steps
Read the full guide to business energy back-billing, and look up the back-billing definition if the jargon on your letter is unclear.
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.