Energy company back billing

Tobias2oo

Hello, Has anyone else encountered this following problem. Whilst the Ofgem rule is that domestic supplies cannot be backbilled more than 12 months, and that communal supplies should still be treated as domestic where they are 100% residential or substantially all residential, my blocks residents are experiencing energy backbilling of over 2 years because the property manager contracts directly then apportions the cost. This is not a resale by a landlord because not profit is taken and the residents all own their flats. It seems to me that this is still a breach of the rule and that the communal supply cannot be treated as a landlord supply.  Does anyone have any thoughts?

QrizB

It's not back billing as your property manager is not an energy company with an Ofgem supply licence.

GingerTim

Tobias2oo said:

Hello, Has anyone else encountered this following problem. Whilst the Ofgem rule is that domestic supplies cannot be backbilled more than 12 months, and that communal supplies should still be treated as domestic where they are 100% residential or substantially all residential, my blocks residents are experiencing energy backbilling of over 2 years because the property manager contracts directly then apportions the cost. This is not a resale by a landlord because not profit is taken and the residents all own their flats. It seems to me that this is still a breach of the rule and that the communal supply cannot be treated as a landlord supply.  Does anyone have any thoughts?

The rules on backbilling are also a bit more complicated than this, despite confusing information put out by Martin L recently.

Gerry1

Thanks to dozy Ofgem, the back billing rules are a lot weaker than many people think.

If you pay by so-called 'Fixed' Direct Debit then the credit will be used to pay the back billed amount and the protection will turn out to be illusory (unless the credit is less than the back billed amount).  It's intended to prevent customers unexpectedly being plunged into debt rather than to encourage suppliers to get their act together.

It would be far better to keep it simple by outlawing all back billing for any period more than 12 months ago.  Even that would be a bit too soft on wonky suppliers, six months should be long enough.

In the meantime, it's another good reason to consider Variable DD (Pay Whole Bill), although of course that means higher bills in winter and lower ones in summer.

Qyburn

I've also seen it alleged that they're allowed to reallocate payments to the older bills.

For example you've paid a recent bill. They issue a "back bill" for usage more than 12 months ago. It is alleged that they can reallocate the recent payment, use it to cover the "back bill", the come after you for the now unpaid recent bill.

If that's truly the case the only protection comes if the back bill is the first you've ever received, and you've not yet made any payment.

MWT

Tobias2oo said:

This is not a resale by a landlord because not profit is taken and the residents all own their flats. It seems to me that this is still a breach of the rule and that the communal supply cannot be treated as a landlord supply.  Does anyone have any thoughts?

Even if it was a resale by a landlord to a tenant they would not be permitted to make a profit on the resale.

It is however a simple matter of whatever contract exists to oblige the flat owners to cover the costs recharged by the Agent. If there is nothing in the contact to oblige the Agent to bill in a timely manner then there is certainly nothing Ofgem rules can do about as this is not covered by a supply license. 

Tobias2oo

Thanks for the input everyone. I'm still not clear on what the outcome of this should be. There are a couple of points mentioned here which, I have found during my journey to this point to be a distration from the issue of the rule. Firstly, we can take the issue of resident direct debit to the agent out of the discussion because many of the flat owners have cancelled their direct debits in order to control their own cost management, but still get the agent passing on old back billed charges from the energy companies. The agent does however, pay central comunal supply bills by direct debit. That we can't change. But does this really have a bearing on whether the energy company should be back billing? If not, then the energy company are/should be due to refund those charges. But again, does the rule apply where there is a commercial contract between the energy company and the agent?

On this last point, it might be useful to look at the HMRC VAT rule. HMRC treat the supply by the energy company to the agent as residential (quite correctly in my opinion) and charges the agent VAT at the residential 5% rate. Why should the Ofgem rule be different in regards to back billing?

Secondly, the agent contract with the resident flat owners. Yes, this does require resident flat owners to cover costs incurred on behalf of the development. But again, does this contract, to which the energy company is not a party, have a bearing on whether the energy company has broken the rule on back billing of residential supply?

MWT

Tobias2oo said:

Thanks for the input everyone. I'm still not clear on what the outcome of this should be. There are a couple of points mentioned here which, I have found during my journey to this point to be a distration from the issue of the rule. Firstly, we can take the issue of resident direct debit to the agent out of the discussion because many of the flat owners have cancelled their direct debits in order to control their own cost management, but still get the agent passing on old back billed charges from the energy companies. The agent does however, pay central comunal supply bills by direct debit. That we can't change. But does this really have a bearing on whether the energy company should be back billing? If not, then the energy company are/should be due to refund those charges. But again, does the rule apply where there is a commercial contract between the energy company and the agent?

Are you even sure that there is back-billing from the energy company and not just late processing of the recharge to the tenants?

Tobias2oo said:

On this last point, it might be useful to look at the HMRC VAT rule. HMRC treat the supply by the energy company to the agent as residential (quite correctly in my opinion) and charges the agent VAT at the residential 5% rate. Why should the Ofgem rule be different in regards to back billing?

HMRC does not charge anyone VAT, all suppliers of anything apply the VAT rate they believe to be correct and declares the VAT to HMRC, so if the VAT on the bills from the Agent is declared at 5%, which would be correct, then that is the action of the Agent not HMRC, but regardless it has no bearing on the fact that the recharging to the tenants is not protected by any back-billing regulations, so for example if the Agent is simply not processing the charges in a timely manner there is no protection from Ofgem.

... but, if the Agent is classified as a micro-business then the back-billing rules can apply to their supplier, but again, do you know for sure that this is a real case of back-billing?

Tobias2oo said:

Secondly, the agent contract with the resident flat owners. Yes, this does require resident flat owners to cover costs incurred on behalf of the development. But again, does this contract, to which the energy company is not a party, have a bearing on whether the energy company has broken the rule on back billing of residential supply?

There is no connection between the two contracts, the issue really seems to hang on your claim that the Agent is failing to secure refunds that you believe they are entitled to under the back-billing regulations, so that requires you to show that they really are entitled to a refund, what evidence do you have to support that contention?

mmmmikey

Tobias2oo said:

Hello, Has anyone else encountered this following problem. Whilst the Ofgem rule is that domestic supplies cannot be backbilled more than 12 months, and that communal supplies should still be treated as domestic where they are 100% residential or substantially all residential, my blocks residents are experiencing energy backbilling of over 2 years because the property manager contracts directly then apportions the cost. This is not a resale by a landlord because not profit is taken and the residents all own their flats. It seems to me that this is still a breach of the rule and that the communal supply cannot be treated as a landlord supply.  Does anyone have any thoughts?

Hi - building on what @MWT says above, unfortunately, this entire thread is based on the false premise that "the Ofgem rule is that domestic supplies cannot be backbilled more than 12 months". This is not the case and never has been the case - there are some circumstances where it is reasonable for the energy supplier to backbill for more than 12 months and they are allowed to do this. What they're not allowed to do is to randomly pop up out of the blue, announce that they've been billing you incorrectly and hit you with a bill for several years back charges which you could never reasonably have seen coming. And of course "reasonableness" is subjective and there are lots of grey areas.

So unless you fully understand the circumstances of the back billing and have evidence to support it shouldn't have happened you have nowhere to go with this. The whole question of whether the rule should apply or not in these circumstances is a moot point. That is, you haven't actually presented any evidence of whether the rules have been broken and unless you have that evidence (which seems unlikely) this whole discussion about whether the rules should apply becomes academic.

Hope this makes sense?