Business Energy Glossary
What is back billing?
Back billing is when a UK energy supplier recovers charges for energy consumed in earlier periods that was previously under-billed. The most common cause is the supplier basing earlier bills on estimates that turn out to be lower than actual consumption. When the actual reading is taken, the supplier discovers a shortfall and issues a back bill for the difference. Ofgem rules introduced in 2018 limit suppliers from back billing micro-business customers for more than 12 months where the under-billing was the supplier mistake.
Back bills can arrive without warning and significantly disrupt cash flow on a business account. The 2018 backbilling rules protect micro-business customers from indefinite retrospective recovery. Larger business customers are not statutorily protected but most major suppliers apply the same 12-month limit as a matter of policy.
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What back billing covers
Back billing is when a supplier sends a bill for energy used in the past that was previously undercharged or not billed at all. Ofgem rules limit most back bills for microbusinesses to the last 12 months where the supplier was at fault.
For the full explanation, see Back-billing rules for business energy.
A back bill is a retrospective charge for energy consumed in a previous billing period that was not fully billed at the time. Common scenarios:
- Estimate-to-actual correction. Bills were estimated lower than actual consumption. When an actual read is obtained, the shortfall is back billed.
- Missed meter read. The supplier did not capture the read at the expected interval; when finally read, the cumulative consumption is higher than billed estimates.
- Wrong meter multiplier. A CT-metered site was billed using the wrong multiplier, understating consumption.
- Wrong tariff or rate. The wrong contract rate was applied; the correct rate produces a higher bill, leading to back billing.
- Wrong VAT rate. 5 per cent VAT was applied where 20 per cent should have applied.
The customer typically becomes aware of back billing when a bill arrives with a much higher figure than usual, or when the supplier contacts the customer explaining a billing correction.
The 12-month rule
The Ofgem backbilling rule, in force since November 2018, applies to micro-business customers. Suppliers cannot recover under-billed energy for more than 12 months from the date of the corrected bill, where the under-billing was the supplier mistake.
The 12 months runs backwards from the date the corrected bill is issued. A bill issued on 1 March 2025 can recover energy consumed back to 1 March 2024 but no further, provided the customer qualifies as micro-business and the under-billing was the supplier mistake.
When the rule applies
The 12-month limit applies when both:
- The customer is a micro-business. Defined by Ofgem as under 100,000 kWh of electricity, under 293,000 kWh of gas, or fewer than 10 employees with turnover below £2 million.
- The under-billing was the supplier mistake. Examples: missed reads, wrong tariff applied, billing system error.
Where both conditions are met, the supplier cannot recover charges for energy consumed more than 12 months before the corrected bill. The recovery is written off as supplier loss.
Exceptions to the rule
The 12-month limit does not apply where the customer obstructed accurate billing. Examples:
- Refused meter reader access on multiple occasions, preventing the supplier from obtaining actual reads.
- Failed to provide a final read on change of tenancy, causing the supplier to estimate the handover period.
- Deliberately misled the supplier about consumption or account details.
- Tampered with the meter to understate consumption.
Where the customer obstructed accurate billing, the supplier can recover the full amount of under-billed energy regardless of how far back it goes.
Larger business customers
Customers above the micro-business threshold are not statutorily protected by the 12-month rule. The full Ofgem protection applies only to micro-businesses.
In practice, most major UK suppliers apply the 12-month limit to all business customers as a matter of policy. The rationale: applying different rules to different customer sizes creates complexity and disputes. Confirming with the supplier whether they apply the policy to larger customers is worthwhile before a back bill arrives.
Larger business contracts can also include their own backbilling terms. The customer contract may state the maximum period over which the supplier can issue corrections. Where the contract is silent, the standard legal position is six years for billing under English law, but this is rarely enforced in practice.
Disputing a back bill
Two routes:
- Internal complaint to the supplier. Submit a written complaint setting out why the back bill is disputed. The supplier has 8 weeks to resolve.
- Escalation to the Energy Ombudsman. After 8 weeks of unresolved complaint, or upon receipt of a deadlock letter, escalate to the Energy Ombudsman. Decisions are binding on the supplier within the scheme financial limit.
Grounds for dispute typically include:
- The customer is a micro-business and the 12-month rule applies.
- The under-billing was the supplier mistake, not customer obstruction.
- The corrected reading is inaccurate (meter fault, wrong multiplier).
- The supplier was previously notified of the change but did not act.
While the dispute is in progress, the customer may agree a payment plan with the supplier for any undisputed portion of the bill. Suppliers cannot disconnect for unpaid amounts under genuine dispute.
back billing FAQs
What is back billing?
When a UK energy supplier recovers charges for energy consumed in earlier periods that was previously under-billed. Most commonly caused by estimates being lower than actual consumption.
What is the 12-month backbilling rule?
An Ofgem rule in force since November 2018 that limits suppliers from recovering under-billed energy from a micro-business customer for more than 12 months from the date of the corrected bill, where the under-billing was the supplier mistake.
Does the 12-month rule apply to all business customers?
Statutorily, only to micro-businesses (under 100,000 kWh electricity, 293,000 kWh gas, or fewer than 10 employees with turnover below £2 million). Most major suppliers apply the same rule to larger business customers as a matter of policy.
Can a supplier back bill me beyond 12 months?
For micro-businesses, no, where the under-billing was the supplier mistake. Where the customer obstructed accurate billing (refused access, failed to provide reads, tampered with the meter), the limit does not apply.
How do I dispute a back bill?
Submit a written complaint to the supplier. After 8 weeks of unresolved complaint, or upon receipt of a deadlock letter, escalate to the Energy Ombudsman. Decisions are binding on the supplier.
Can I be back billed for old estimated reads?
Yes, but for micro-businesses the recovery is limited to 12 months. The supplier cannot recover for under-billed energy older than 12 months from the date of the corrected bill.
What if I am still being billed at estimated rates years later?
Request actual reads from the supplier and submit your own reads regularly. If a large correction follows, the 12-month rule limits any under-billing recovery to the last 12 months for micro-businesses.
When does back billing not apply?
When the under-billing was caused by customer obstruction: refused access for meter reads, failure to provide a final read on change of tenancy, deliberate misrepresentation, or meter tampering. In these cases the supplier can recover the full under-billed amount.