Energy firms told to improve billing

Energy firms told to improve billing

Energy firms have been given a year to improve the way they bill consumers, or they could face regulatory action, the industry regulator, Ofgem warned today.

The regulator carried out an investigation into energy companies after receiving a "super complaint" about billing from the industry watchdog, Energywatch on April 5 2005. Ofgem also considered complaints from Citizens Advice Bureaux.

It did not find widespread failure in companies' billing arrangements, but said a number of customers had suffered as a result of billing mistakes, and outlined measures which would offer more protection for consumers.

The regulator said firms must put an end to the practice of "back-billing" beyond two years if no bill is issued and fault lies with the supplier. It set a target of 2007 by which time companies must reduce back-billing to one year.

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In addition, an independent disputes body is to be set up to resolve problems and award compensation, and firms must review customer contracts to ensure they comply with consumer rights legislation.

"For the vast majority of customers, the energy market works well," said Ofgem's chief executive, Alastair Buchanan. "But suppliers can get things wrong, and when they do, this can cause customers real distress and hardship."

"Ofgem is committed to the principles of better regulation and we have, therefore, told the industry that they have a year to put their own house in order - or risk facing regulatory action.

"We believe this package is a proportionate and targeted response to the findings of our investigation."

Mr Buchanan added that good billing would offer consumers more information about how much energy they use and at what cost.

"The measures outlined today by Ofgem will improve billing standards for all customers, however, the competitive market also allows customers to punish poor service by switching suppliers," he said.

Energywatch, the watchdog that lodged the "super complaint" today welcomed Ofgem's announcement.

"This is a great opportunity for suppliers," said Allan Asher, chief executive of Energywatch. "I urge them to join with Energywatch and take advantage of this to sort out their billing problems."

Mr Asher said it was unacceptable that companies can take six years to issue a bill before insisting on payment, causing people anxiety and plunging them into debt.

"Our super complaint showed that companies are issuing bills years after they should have done so. If companies are going to lose the right to claw back that money, they will find themselves out of pocket," he said. "That should concentrate their minds."

Mr Asher said if firms make billing timely and accurate it would be a "win-win situation for consumers and companies".

He said: "Consumers get a better service and companies get to recover their payments.

"Consumers should know what they can expect from their supplier. Contracts are clumsy and fail to set out essential rights and responsibilities."

And Mr Asher welcomed measures to set up a scheme offering customers redress.

"It has been a source of great frustration for us that there is nowhere for consumers to go when Energywatch is unable to resolve complaints. An ombudsman scheme will be a good solution."

If energy companies fail to take the measures outlined, Ofgem has the power to force them to do so through the introduction of licence conditions, which, if broken could result in the firms facing fines.

Guardian Unlimited © Guardian Newspapers Limited 2005