Footing the bill: How the energy bill protection gap is putting strain on households
Footing the bill: How the energy bill protection gap is putting strain on households 2.34 MB
Energy billing issues aren’t a new problem, but since the energy affordability crisis, the consequences for consumers are frequently more serious. Average bills are still 66% higher than the historic norms we saw in summer 2021, meaning that when things go wrong the cost to consumers is higher and they are more likely to need support with resolving their issue.
The number of people coming to Citizens Advice for help with a billing issue has sharply increased over the last four years. So far in 2024 (to the end of October) our services have helped over 52,000 people with billing issues, an 83% increase compared to the same point in 2020 (although down from a peak of over 55,000 in 2023). Since March of this year, billing issues have been the single most common type of issue our consumer service advisors encounter. In the same period, the total number of contacts to our local offices relating to a billing issue increased by nearly 250%. Billing issues as a proportion of overall issues increased by 28% between the two periods.
Back-billing rules are designed to protect people against bills for energy used over 12 months ago, as long as their supplier didn’t previously bill for that energy before the year had passed. However, the rising price of energy means that these rules leave people at risk of higher catch-up bills. Based on a sample of billing cases, we estimate that the average size of a catch-up bill could have increased by more than £800 in 3 years. The increased uptake of smart meters, which should mean an end to estimated billing, offers an opportunity to strengthen these protections.
Billing issues can result in serious harm. That’s why it is crucial that suppliers get billing right. This means providing consumers with accurate and regular bills, which they can easily understand in order to make informed decisions about their energy consumption and costs. When issues do arise, suppliers should be resolving them quickly, and Ofgem should take action where necessary to ensure that they do so.
The following reforms would help to prevent consumers from falling through the current gaps in protections:
Limiting the back-billing period to 6 months for customers with smart meters, meaning some suppliers will need to work harder to ensure their customers receive regular accurate bills.
Extending the Guaranteed Standards of Performance to incentivise suppliers to ensure smart meter equipment is operating properly, which would help reduce estimated billing.
Better enforcement from Ofgem where suppliers fail to meet billing standards, and proactive action to clarify any existing guidance on billing.
A renewed focus on billing through industry-wide initiatives.
Introducing a new Consumer Duty would raise standards across the board, by ensuring suppliers monitor and improve customer outcomes.