We’ve heard from an energy customer who received a £4,000 bill on top of their monthly £150 direct debit. We’re surrounded by companies putting up their prices, so how can we protect ourselves from bumper energy bills?
Surrounded by announcements of gas and electricity prices going up, you’d be forgiven for thinking that hefty energy bills are the norm, and in some cases it can certainly feel that way. The largest single price rise from a big energy company is 9.8%, but some customers are facing bills of hundred of pounds more than they expected.
EDF Energy was the latest to announce a price hike this week – its second in six months – which will inch bills for standard dual fuel tariff customers upwards yet again. Moreover, all the big energy firms, with the exception of British Gas, as well as a number of smaller ones, have pushed up their gas and electricity prices this spring.
However, aside from the bill increases we’ve come to dread, we’re also hearing complaints about huge, unexpected energy bills.
Our consumer research shows a quarter of people are in financial distress, from cutting back on spending to defaulting on essential bills. For these people a sudden bumper bill would be unmanageable.
For example, if you’re with the biggest energy supplier, British Gas, on its standard tariff, your average annual bill comes to around £1,044. So, it’s a nasty shock when your bill ends up being much bigger than the £87 you’re already expected to pay each month.
Citizen’s Advice (CA) took the problem of suppliers sending customers sizeable surprise bills, covering over a year’s usage (called back-billing), to energy regulator Ofgem. CA said in February that as many as 2.1 million households may have had large late energy bills in the last year.
Why the big bills?
Back-bills arise when suppliers estimate billing until they, or you, take an actual meter reading. If this shows you’ve used more energy than your supplier estimated, then they send a catch-up bill to recover the difference. This can add up to a large sum being owed, and billed, all at once.
You can protect yourself from big unexpected bills:
- Checking when your energy tariff ends
- Comparing energy prices and switching provider
- Submitting regular meter readings
- Changing your direct debit if you notice it’s too low or high (you’ll pay more than you’re using In summer and for less in winter so the cost evens out over the year)
- Contacting your energy supplier if you think your bill is incorrect
Ofgem takes action
To help protect consumers from unexpectedly large bills, energy regulator Ofgem proposed to ban energy firms from back-billing customers for gas and electricity they used more than 12 months ago.
This has been a voluntary commitment for suppliers since 2007 when firms agreed not to back-bill if they were at fault. However, around 40 new energy suppliers have joined the market since then and
Ofgem is worried that some suppliers aren’t applying the voluntary agreement and are lacking sufficient back-billing protection.
Ofgem expects the new rule should be in place by winter 2017.
Have you had an unexpectedly high bill from your energy supplier? How much was it for and why? What did you do?
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