Martin Lewis: Just been billed for energy used over a year ago? You DON'T need to pay it – the rules are there, but they need tightening
MoneySavingExpert.com founder Martin Lewis gave evidence to the Commons Energy Committee of MPs on back-billing last week. Energy firms are banned from hitting you with an unexpected bill for energy used over 12 months ago that you haven't been correctly billed for before, but there are over 3,000 complaints to the Ombudsman of just this happening – and that's likely just the tip of the iceberg.
Under the energy regulator Ofgem's rules, a supplier can only issue a back-bill where the customer has 'unreasonably obstructed' it before – yet, as Martin explained in his evidence, that's poorly defined, so right now many complaints fall into a grey area. He urged the regulator to provide more specific guidance on exactly what's considered an obstruction.
Martin also explained that few consumers are aware of the rules in the first place and highlighted problems with the Energy Ombudsman. He also called for back-bills to include prominent warnings telling customers what their rights are, and argued that the back-billing period should be cut from 12 months to six – as there's no reason bills should take longer than this in our modern digital age.
The Energy Security and Net Zero Committee had gathered to hear evidence about how thousands of customers have ended up with outdated or inaccurate energy bills. Bill Esterson MP, chair of the committee, also wrote to Ofgem about the issue in February, detailing his personal experience of being charged for energy used "well beyond" the cut-off.
Watch Martin's evidence to the Energy Committee
If you'd prefer to read what Martin said, you can find a transcript below.
Ofgem officials and Government ministers from the Department for Energy Security and Net Zero also gave evidence at the Committee meeting – you can watch the full session on Parliament.tv.
Many consumers are unaware of the back-billing rules
Earlier this year, an investigation by the BBC's Money Box revealed widespread problems with suppliers allegedly breaking back-billing rules, with over 3,000 complaints made to the Energy Ombudsman in the year to September 2024.
However, Martin said these are likely just the tip of the iceberg, because not everyone will have escalated their complaint that far – and many aren't aware of the back-billing rule so won't know to complain in the first place.
Even when customers do complain, suppliers sometimes use confusing legal jargon to bamboozle you into thinking that you do owe the money. "Many people get worried. They get scared. 'I'm going to have bailiffs at my door' – even if it's not being suggested. So they pay," Martin said.
Addressing this point, Beth Martin, director for consumer protection and competition at Ofgem, told the Committee: "As Martin Lewis says, we have a fundamental licence condition around these standards of conduct, so suppliers have to treat customers fairly, honestly and in a professional manner. It applies to every single interaction that a supplier has with a customer, and we will take action on that if we need to."
Tim Jarvis, director general at Ofgem, added: "It's often not so much the bill, it's the treatment of the customer when they query the bill, that they're having to battle for months on end. We have a range of licence conditions that we will look at, including treating customers fairly to make sure they get good treatment."
There's no reason why energy firms should take longer than six months to issue a correct bill
Asked whether the back-billing limit should be reduced from 12 months to six, Martin said: "We live in a modern digital age where we're trying to have smart meters installed that give you an instant reading of what is going on in your energy system. Why should a firm take over six months to give you a correct bill? I can't see any reason for that."
Mr Jarvis agreed with Martin on this point. "Where a supplier is getting accurate and timely information through a smart meter there is no reason that we can see for back-billing," he said. "We're looking at reducing it from 12 [months]; we're looking at all options."
Back-billing has been worsened by the high price of energy
Martin gave a simple answer for why the problem of back-billing seems to be getting worse: energy bills are higher.
"If you get a back-bill for £150, you spit and swear a bit, and you pay, and you get on with it," he said. "If you get a back-bill for £10,000, you try and fight it. And I think that's the reason for this raising its head."
Energy Minister Miatta Fahnbulleh expressed concerns that incorrect back-billing was a symptom of wider issues. She said: "The thing that I'm candidly worried about is that this is a bit of the canary in the coal mine, which is why we've moved pretty quickly to our regulator to look at this and to make sure it's not happening."
Suppliers that repeatedly back-bill incorrectly should face tougher consequences
When asked by Claire Young MP if there should be harsher penalties for suppliers that repeatedly back-bill incorrectly, Martin called for tougher action: "If you're a repeat offender and you've been warned by the regulator, why should you be allowed to have an energy licence if you're causing catastrophic finances [for your customers]?
"A year is a very long time to get your bills right, and if you've cocked up as a company, why are you asking the customer to pay for your cock up?"
In response to a similar question, Ms Fahnbulleh told the Committee: "The case for more powers is absolutely clear and that's one of the things we'll look at. For me, of course the regulator needs to get on top of this, but I think there's a wider set of things it needs to look into in terms of customer service and experience that goes beyond back-billing."
DON'T just ignore a back-bill if you get one – here's what to try instead:
Challenge your energy firm to explain exactly why it's back-billing you. Energy firms are required to bill you accurately and promptly. If yours hasn't – and you haven't unreasonably obstructed it – then it can't suddenly issue you a bill for energy used over 12 months ago that it hasn't correctly billed you for before.
If you're not happy with its response, raise a formal complaint. You can do this directly with the firm or using the free Resolver tool, which will keep track of your progress and evidence.
As a last resort, escalate your complaint. If you've already tried contacting the firm and it's been more than eight weeks since you lodged your formal complaint (or you've received a deadlock letter), you can then take it to the free Energy Ombudsman, an independent body that handles disputes between consumers and energy firms.
Martin also gave evidence on other key energy issues
At the session, Martin also raised several crucial energy issues, including:
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High standing charges. It costs over £300 a year just to have the facility of gas and electricity, even if you don't use any. As Martin has repeatedly said, this is a moral hazard that disincentivises lower users from cutting their bills, and leaves many older people, who only use gas for heating in the winter, still paying for it every day in summer.
Last month, Ofgem announced that it would introduce a 'low or no standing charge' option alongside the existing Price Cap. Martin said this represented good progress, but warned that vulnerable lower users need to be moved to these options automatically, to ensure they benefit. -
The "abomination" of the smart meter rollout. The Government's estimate of how many domestic smart meters are not working is around 10% – but our research suggests the true figure is much higher, leaving consumers frustrated and at risk of mis-billing and further problems.
Martin said the Government is too focused on installing more smart meters, instead of fixing the broken ones. This is an issue Martin wrote to Energy Secretary Ed Miliband about back in September – for more info, read the full letter. -
Limited competition in the energy market. Currently, the difference between the Energy Price Cap and the cheapest tariffs on the market is smaller than it was before the energy crisis – meaning switchers aren't benefiting as much from suppliers competing for business.
This situation isn't helped by Ofgem's ban on so-called 'acquisition-only tariffs', which means that suppliers are not allowed to offer better deals to new customers than existing customers. Martin said: "If I were here with you in normal times, I would be supporting that. But we have limited competition. We need to do everything we possibly can to kick start competition."
What do the energy firms say?
Responding to Martin's comments, a spokesperson for Scottish Power said: "Scottish Power has worked hard and made great strides in customer service with Citizens Advice ranking us as the best big supplier. We have robust processes and a unique customer system which consistently delivers a high performance on billing for our customers."
A spokesperson for industry body Energy UK said: "Customer debt currently stands at a record near £4 billion and as unpaid debt is ultimately recovered from all bills, suppliers do have a duty to try and recover money where appropriate. Back-billing accounts for a relatively small proportion of complaints but, as with other billing matters, suppliers will regularly monitor their performance to identify any issues and train staff to manage back-billing cases."
Martin Lewis: "The principles are certainly clear. You should not back-bill more than 12 months as long as there hasn't been an 'unreasonable obstacle'. Now, that is pretty plain.
"For me, where there is confusion is Ofgem doesn't describe when the back-billing exemption is valid. So that 'unreasonable obstacle' is principles-based regulation rather than examples-based regulation. And I think that pendulum needs to shift the other way.
"You know, has someone who: someone came to read their meter, they were not available at the time, so the meter reader went away. They then sent letters to that person. That person didn't... Says they didn't receive the letters. Has the company done enough? Has the company not done enough?
"The company will clearly say it's done enough. The consumer will clearly say it hasn't done enough. Where is the dividing line? I don't know. Because all we have is 'there should not be an unreasonable obstacle'. Now we all know that the definition of reasonableness changes depending on who is looking at it and whose definition of reasonable it is. So I think there is a lack of specificity in the definition of that.
"With that said, I think there are companies who clearly know there has not been an unreasonable obstacle who are still back-billing. And I think we have a systemic problem of lack of enforcement over the back-billing rules, over a flaccid Energy Ombudsman, which I think is a real problem."
'Energy companies shouldn't use customers being in credit as an excuse to back-bill'
Martin: "And one of the things that we have discovered when looking into this issue is – we think there is a real issue of breach, that what energy firms are doing is, they are saying: 'If customers are in credit when we are back-billing' – so they know they're back-billing – 'it is fine to take the credit when we’re back-billing because we're not asking them for money'.
"That is not fine. It is not correct. Credit is still money. You shouldn't be taking it. But they are using that as their justification for back-billing and we have examples of that.
"So I think, first of all, I would – and I don't think Ofgem's particularly got this wrong in the form of deliberation [deliberately]. So I'm not trying to slap Ofgem around on this, to be fair…"
'There is a lack of care from energy firms on how this works'
Mr Esterson: "But do you think there are energy companies who are deliberately using the kind of ambiguity that you alluded to?”
Martin: "Deliberately? I would say negligently rather than deliberately, probably. I don't think there's a chief executive who has sat there and said: 'Let's go back-bill and get every penny we can'. I think energy firm systems and billing systems, and certainly there are some who are worse than others…
"Scottish Power has always been particularly abominable. I hope it's improved over the last few years, but I know that I can say that here without any worries. So I will say it, Scottish Power has been particularly abominable of its billing over the years.
"And I think there is just a lack of care on how this works and a lack of being really strict and saying: ‘You can't back-bill’. And you know, there are obvious and direct examples of them charging people on the bills.
"And the interesting thing about this is I know you've heard evidence of 3,000 people complained to the Ombudsman. Well, I mean, first of all, that's trivial compared to the number of people who complain to the firm, but the number of people who complain to the firm are a subset of those people who know there's a back-billing rule.
"So we are actually reliant on those who know there's a back-billing rule to complain about back-billing, not of what's actually happening. Now, in what is close to a public utility like energy, it is the energy companies who should be proscribing back-billing, not the customers having to revolt over back-billing."
'Suppliers should follow the back-billing rules without relying on customers to complain'
Martin: "And if I just take that, so you have the first problem – there are many people who are back-billing who don't know that there is a back-billing rule. Then there are those who complain to the companies and, as many companies do – and energy company specifically – some of their staff are not well trained or it's negligent (or it may be deliberate, but I have no proof of that). Those companies then use legalese to say: 'No, you do owe us the money'.
"And many people when they get, 'you do owe us the money', they get worried, they get scared: 'I'm going to have bailiffs at my door'. Even if it's not been suggested. That's what they worry about – so they pay.
"Then you get those few people who actually are tooled up enough to know that they should go to the Energy Ombudsman who can give them an independent adjudication. Then we get to the Energy Ombudsman when we get a ruling."
'We need a statutory Energy Ombudsman'
Martin: "Now if I just do the Energy Ombudsman for a second, which is another one of the really big issues. The Energy Ombudsman, and this isn't about the organisation, I think their adjudications tend to be pretty decent. The Energy Ombudsman isn't really an ombudsman. The Energy Ombudsman is an appointed alternative dispute resolution process, right? It is not an ombudsman.
"We don't have a protected term 'ombudsman' in this country. We absolutely should do. There are ombudsmen out there who really aren't ombudsmen and should be allowed to call themselves ombudsmen. We have a 2017 report on that. If any of you are interested, I can send it to you later. That's much wider than just the energy sector.
"So there is only one, in the consumer sector, really strong ombudsman and that is the Financial Ombudsman Service, which is a statutory body. When you get a ruling from the Financial Ombudsman Service, first of all – almost all firms obey it. In the very few occasions that they don't, you can take them to court and you already have a ruling. So the court is just enforcing the ombudsman ruling.
"That is not the same [in energy], as far as I know – and it's been tough to get an answer, to be fair on this… What happens if you have an Energy Ombudsman ruling? First of all, the rate of companies complying with the Ombudsman ruling is not close to the Financial Ombudsman.
"I don't have the exact numbers, but I can tell you from the mailbag levels we get we get virtually no complaints about firms not upholding Financial Ombudsman rulings. We get a lot about them not upholding the energy ombudsman ruling. I don't have a statistical number though, so I'm afraid it's only anecdotal."
'The back-billing period should be reduced to six months'
Mr Esterson: "I'm gonna move on. Ofgem are going to be giving some evidence a bit later. A couple of questions about your views. Should… Do you support calls to reduce the back-billing period to six months? Do you think the Ofgem rules on back-billing are fair on consumers at the moment? And is Ofgem doing enough to crack down on unfair and inaccurate billing?”
Martin: "We live in a modern digital age where we're trying to have smart meters installed that gives you an instant reading of what is going on in your energy system. Why should a firm take over six months to give you a correct bill? I can't see any reason for that.
"And so I absolutely would support reducing it to six months. I would also support mandating that companies, if they are billing you for a period that is over the back-billing period, whether that be six months or it be 12 months, they must include in prominent print on any letter where they are doing that, you know, 'there is a back-billing rule. If you believe we are doing this, you have a right to forward it.' So that the rule must be incorporated.
"If they believe that it's a fair back-billing over the six month period, then they should be quoting prominently the rule so that you know your rights, if you want to argue that (and that doesn't happen) rather than just allowing it to go through."
'The rules on back-billing need to be more specific'
Mr Esterson: "So do you want to see more of a crackdown from Ofgem?"
Martin: "Yeah, well, I'd like to see two things. First of all, I think the rule needs to be more specific. The biggest complaints we tend to get are through the grey areas of whether somebody has obstructed or not. And I would like to see more specific rules from Ofgem on that.
"So principles-based is fine, but with some specific examples and setting up some codification of what does count and what doesn't count as back-billing.
"And yeah, I absolutely think Ofgem… Look, if you've got 3,000 cases at the Ombudsman, it's quite easy to do an analysis of what companies they are with to see which companies tend to have the major systemic faults. And then Ofgem should be investigating those companies.
"I mean, that's how ombudsmen should always work. If you have upholds at the ombudsman to a company on a specific issue that is manifestly disproportionate to other companies, then clearly there's a regulatory issue and a systemic issue in the way that company's behaving and it should be cracked down on."
Transcript of what Martin told MPs
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22 April 2025
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