Over £20 million paid out by UK energy firms for billing mistakes

Major UK energy suppliers have paid out more than £20 million in compensation for billing mistakes over the last five years, according to research by The Guardian. By analysing published data on cases handled by the Energy Ombudsman, the newspaper found that billing complaints increased by 141% over the last five years. British Gas parent company Centrica was the biggest culprit, with the ombudsman forcing it to pay out £4.14m in compensation.

Why has so much been paid out for billing errors?

The payouts are considered 'time and trouble' awards to compensate customers for the inconvenience and stress of being billed incorrectly, which means they do not include money returned to people who had erroneously overpaid.

Billing errors can be caused by faulty meters, estimated readings not matching actual usage, technical errors and administrative mistakes. When a consumer receives a bill they believe to be incorrect, the process of getting a provider to investigate potential errors or explain mistakes can be painstaking. Many cases take months, or even years. When a provider reaches an eventual conclusion, the consumer may face a significant bill to clear the backlog built up during the investigation. If they are unhappy with what they are asked to pay and the service they have received, they can challenge the provider's findings by registering a complaint with the Energy Ombudsman.

Responding to The Guardian report, the Energy Ombudsman said: "The sector has faced a series of challenges since 2020, including Covid-19, specific supplier failures, and then huge increases in the cost of gas and electricity.

"Each of these has brought new problems for both consumers and suppliers, and makes it harder for both sides to come to a resolution when disputes arise.

"It’s important to note that disputes have started to come down from their peak in 2023, despite remaining higher than previous years.

"This trend, as well as the continuing challenges in the sector, demonstrate the need for suppliers to continue to work to resolve issues directly with consumers."

How to challenge a billing error

The Energy Ombudsman is the dispute resolution service tasked with independently adjudicating conflicts between customers and energy suppliers. You will need to complain to your provider first, then register your complaint to the Energy Ombudsman if you are not happy with your provider's decision or you have not been given a decision within 8 weeks. The Energy Ombudsman has the power to get your supplier to respond to your complaint or reconsider its decision if it has already made one. It can ultimately decide that the provider's original decision was correct, or that mistakes were made and you are due financial compensation.

While the headline £20 million figure may seem shocking, the true amount owed to customers may be even higher when considering consumers who do not register a complaint. It is frustrating to have to go to the length of complaining to the ombudsman just to get fair service, but many campaigners argue that it is an important part of holding energy companies to account.

Peter Smith, director of policy at the fuel poverty charity National Energy Action said: "Sadly, we have witnessed the impact when an inaccurate, or shock bill, pushes a vulnerable consumer to breaking point. Beyond the financial impact, the stress and anxiety are often unbearable and affect people’s daily lives.

"Often, these types of consumers won’t be aware of routes to challenge misbilling or seek compensation, so this increase could just be the tip of the iceberg."

What is being done to prevent more billing errors in the future?

In addition to the investigation by The Guardian, Citizens Advice has released its own data showing a 472% increase in complaints made against dual-fuel energy companies between 2013 and 2023. The data did not show the outcome of the complaints, but it does suggest a growing issue with energy billing.

Alex Belsham-Harris, the head of energy policy at Citizens Advice, said: "Our advisers often hear from people who are barely making ends meet, and an inaccurate bill not only risks plunging them into debt, but can take huge effort and stress to resolve.

"Energy consumers simply can’t afford to pick up the tab when something goes wrong. Ofgem must limit back-billing to curb the amount customers can be charged, and it should raise service standards so people struggling with billing issues get the help they need."

Citizens Advice has joined many prominent voices – including Ed Miliband, the Secretary of State for Energy – in arguing that Ofgem should act on 'back-billing' practices. Restricting energy providers' ability to 'back bill' by cutting down how far into the past they can go with revised charges would not eliminate billing errors, but it could reduce the astronomic costs consumers are faced with when their supplier 'corrects' years of billing.

It has also been suggested that speeding up the rollout of smart meters will cut down billing errors. This would theoretically cut out the incidents relating to estimated usage, but there have been stories of malfunctioning smart meters triggering some of the most shocking recent billing errors.

One of the best ways to mitigate billing errors is to record your meter readings regularly and work out what your bill should be yourself. That way you can spot any mistakes quickly and back up any complaints with photographic evidence.

Should you switch energy provider if you spot a billing error?

If you think there has been a mistake with how your energy bills have been calculated, your best option is to contact your provider and complain. First, make sure the meter readings on the bill are correct and all the details are accurate, including your meter number. Then follow your provider's complaints procedure and wait for their response. If you do not get one within eight weeks or you are not happy with it, register your complaint with the Energy Ombudsman.

Switching provider while the issue is being investigated could complicate things and make it harder to resolve the issue and get any compensation you are owed. Once everything is resolved, you can look at switching providers if you are not happy with how the situation was handled.

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