Do you really understand your energy bill? Don’t worry, you are not alone.

The way gas and electricity bills are calculated is so fiendishly complicated, millions of us just accept what our direct debit demands. In fact, complaints about energy billing tend to occur when the bill is so outrageously wrong or unfair there’s little option but to fight back.

But energy firms do make mistakes. Millions of them.

Cast your mind back to March 2021 before the energy crisis plunged us in to a nightmare of failing service providers and bonkers bill hikes. Energy regulator Ofgem revealed that its research had revealed over one million errors had been made by 18 energy businesses with switching providers alone. It total, the regulator told businesses to pay redress and refunds of £10.4 million.

But let that figure sink in for a moment. This research covered mistakes made when switching from one provider of energy to another – a process very clearly laid out and covered by a range of regulatory requirements. That occured before 29 energy providers bit the dust and millions of us were transferred to other energy providers as a consequence. That figure doesn’t include basic billing errors, wonky meters and the day-to-day problems that affect us all.

So, can you trust your energy bill?

How to know if you’re being billed correctly

Let’s be realistic. Most of us don’t have the time or energy to become energy billing experts overnight. But by applying a healthy dose of logic and scepticism in equal measure, combined with regular meter readings, you can avoid many of the big billing problems. Here’s my guide on what you need to watch out for.

Back billing

Ofgem have made it clear that you should not be billed for some specific things, yet thousands of people report that energy firms have flouted these rules every year.

Back billing is where you are charged for gas and/or electricity that you (allegedly) used over a year ago if you weren’t billed for it at the time. This is a bit complicated to explain in plain English, but in short, if the supplier realises that it’s been billing you the wrong amount, it can’t suddenly demand that you pay thousands of pounds dating back five years. They can only ‘back bill’ you for the last 12 months.

Even then, if the energy provider has clearly been remiss in its duties, you can still complain about the recalculation. For example, if no one has read the meter for ages (and you haven’t just hide behind the sofa when they came round) or the energy consumption is entirely out of sync with what an average householder in a property like yours should be using, then you should push back.

In terms of outstanding debts that you’ve been correctly billed for, the business can pursue the debt for up to six years under the Statute of Limitations.

The computer made me do it

Energy billing is generally calculated by computers, with varying degrees of human oversight. If you complain about a billing issue, you can – and should – expect an actual person to investigate if the bill looks right or not.

Sadly, there’s still a lot of deference to the mighty word of the computer, so be prepared to take your complaint further. A rather weird quirk that’s arisen with some energy firms recently is computers discounting media readings given by customers, presumably because they don’t match up with the previous reading history. I’ve helped sort out a number of cases where the actual readings seem to have been ignored for estimates.

The moral of this tale is to always check your bill to see if your readings are registered and have been taken in to account. I make a point of photographing my gas and energy readings each month now and saving the pics, just in case there’s a dispute about my energy use.

Credit balances

Astoundingly, £4.5 billion of your cash is currently being held as ‘credit balances’ by energy companies. Much controversy has ensued with some energy bosses accusing others (accurately) of using that money like a business loan.

I can’t think of any other sector that operates with this credit/debt model, where you spend half the year building up credit and then use that credit to pay off increasing bills in the winter.

In theory, this does spread the cost of energy over a year. But why are we effectively lending energy firms this cash? Could we be making better use of that money?

The simple answer is yes. Interest rates on savings accounts are pretty good at the moment so in theory, you can ask for your credit balance back and pop it in a savings account, allowing your direct debits to increase instead over Winter. This requires discipline and organisation though and you need a ‘float’ of money to cover unexpected price hikes (I’d leave at least two months’ worth of cash with the firm). Bear in mind ‘notice’ accounts for savings mean you can’t access your cash for set periods too.

Frankly, I’d like to see energy firms forced to ‘ring fence’ these credit balances, pop them in savings accounts and pay the interest to you instead. Tell your MP.

Mistaken identity

One of the worst billing error problems comes when you are pursued for a debt that allegedly belongs to a former tenant or owner of a property.

When you move in to a new home, take a meter reading straight away, photo the meter and send it to the energy provider straight away. Make it clear that you are only formally residing at the property from that date. However, despite the best intentions, things can still go horribly wrong.

Sometimes former tenants give artificially low meter readings to avoid big bills when they move. Alternatively meter errors do occur, or (more commonly) a business might have over-relied on estimates, not realising that the actual energy use was much higher. So when an genuine meter reading is presented, this can mean thousands of pounds is outstanding.

These bills are not your responsibility, so fight back if you start to get them. Annoyingly, some energy firms continue to send bills to former tenants or home owners to your address. You might also find that the energy firm is billing a ‘ghost’ tenant for the few weeks when a property was vacant before you moved in. Trying to sort out this can be a nightmare, as the firm won’t talk to you if you aren’t the person named on the bill.

So make a written complaint instructing the business to suspend all debt collection procedures while the matter is investigated and make it clear that you will be making a complaint to the Energy Ombudsman if this continues. The same goes for debt collectors too.

Don’t forget the Energy Ombudsman

The Energy Ombudsman is a free service that you can take a complaint to if the you aren’t happy with the energy firm’s response. Like all ombudsmen, the service is free, fair and impartial – and you can still go to Court if you are unhappy with their final decision. Unlike the Courts, where the judge must consider the letter of the law, the ombudsman has a bit more leeway to determine what is ‘fair and reasonable’ under the circumstances. You can find out more here.

On a personal note, I understand why you might get fed up with an energy problem and think there’s no point pursuing it. But trust me, it’s worth it and it doesn’t have to be a huge drain on your time. Write down what you’re unhappy with and what you want to sort things out and send on the same letter to the energy firm and ombudsman. Standing up for yourself is worth every penny.

Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist.

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