Ofgem's back-billing rule prevents energy suppliers from recovering charges for energy consumed more than 12 months before the date of a corrected bill, where the supplier was responsible for the billing failure. The protection applies to microbusiness customers. Exceptions exist where the customer obstructed meter access or submitted false reads. The Energy Ombudsman can enforce the rule where a supplier disputes it.
Last reviewed: 12 May 2026
What Back-Billing Is and Why It Happens
Back-billing occurs when an energy supplier issues a corrected invoice that includes charges for energy consumed in a previous period that was either under-billed or not billed at all. The most common cause is a prolonged sequence of estimated reads that significantly underestimated actual consumption. When an actual read is eventually obtained, the supplier calculates the difference between billed and actual consumption and attempts to recover the shortfall in a single catch-up charge.
For businesses running on tight margins, a back-bill representing months or years of under-charged energy can be seriously damaging. A business that has budgeted on the basis of its regular invoices has no reason to anticipate a large corrective charge and may have no reserves to meet it.
Ofgem introduced the back-billing principle to limit the period over which suppliers can recover historical charges and to place the burden of accurate billing on the supplier rather than the customer.
Who the Rule Applies To: Microbusinesses
The back-billing protection in its strongest form applies specifically to microbusiness customers as defined by Ofgem. A microbusiness is:
- A business that consumes fewer than 100,000 kWh of electricity per year, or fewer than 293,000 kWh of gas per year; or
- A business with fewer than 10 employees (or equivalent full-time) and an annual turnover or annual balance sheet not exceeding 2 million euros
A business meeting any of these criteria qualifies as a microbusiness under Ofgem's Standard Licence Condition 7A. Suppliers are subject to enhanced obligations in their dealings with microbusinesses, including the back-billing protection set out in SLC 21B.
For larger businesses that do not meet the microbusiness definition, there is no equivalent regulatory protection against back-billing. Larger businesses may still dispute back-bills on contractual or common law grounds, but the regulatory backstop is not available to them.
The 12-Month Rule: What SLC 21B Requires
Standard Licence Condition 21B of the electricity and gas supply licences requires suppliers not to recover from a microbusiness customer charges for energy used more than 12 months before the date on which a corrected bill is issued, where the under-billing was the result of the supplier's own failure.
The supplier's failure includes:
- Failure to read the meter within a reasonable timeframe
- Failure to use actual reads when they were available
- Errors in the supplier's billing system that produced incorrect invoices
- Failure to apply the correct tariff
The key phrase is that the under-billing must be the result of the supplier's failure. Where the billing error arose because the customer provided false or inaccurate information, the rule does not apply. Similarly, if the customer prevented the supplier from accessing the meter, the 12-month limit does not automatically protect the customer.
The 12-month period runs from the date the corrected bill is issued, not from the date the error was discovered or the date the customer complained. A supplier that takes several months to investigate a complaint before issuing a corrected bill cannot use the delay to extend the recovery window.
What the Rule Does Not Cover: The Exceptions
Three main exceptions limit the protection:
Exception 1: Customer obstruction If the customer has actively prevented the supplier from reading the meter, for example by denying access to a meter on private property or by refusing to respond to requests for meter readings, the 12-month limit may not apply. Suppliers must be able to demonstrate that they made reasonable attempts to obtain accurate reads.
Exception 2: False or deliberately inaccurate reads Where a customer submitted meter reads that they knew to be inaccurate, leading to systematic under-billing, the protection does not apply to the extent that the under-billing resulted from the false reads. Suppliers raising this exception need to evidence the pattern of readings and why they consider them to have been deliberately manipulated.
Exception 3: Theft of energy or meter tampering Where the under-billing resulted from meter tampering or deliberate interference with the supply, the back-billing protection does not apply. Suppliers can recover all charges attributable to theft, subject to their ability to estimate the relevant consumption.
Most ordinary back-billing disputes involve none of these exceptions. The typical case is a business that relied on supplier estimates for an extended period, received a corrected bill when an actual read was eventually taken, and is now being asked to pay for two or three years of accumulated under-billing. In this scenario, provided the customer did not obstruct meter access or submit false reads, the 12-month rule should cap the recovery.
How to Dispute a Back-Bill
If a supplier issues a back-bill that you believe exceeds the 12-month limit, the dispute process follows the standard energy complaint procedure:
Step 1: Write to the supplier formally Put the dispute in writing, referencing SLC 21B and the 12-month back-billing principle. State clearly what period the back-bill covers and why you consider charges beyond 12 months before the corrected bill date to be unrecoverable. Ask the supplier to confirm the date of the corrected bill and to recalculate the recoverable amount accordingly.
Step 2: Request a billing history Ask the supplier to provide a full billing history for your account, showing every invoice issued, the meter reads used (actual or estimated), and the dates. This record is the foundation of any dispute. It establishes the period over which estimated reads were applied and demonstrates that the under-billing was the supplier's responsibility.
Step 3: Withhold the disputed portion pending resolution You are not required to pay the disputed portion of the bill while the formal dispute is open, provided you are paying the undisputed amount. Suppliers cannot disconnect a microbusiness for non-payment of a genuinely disputed charge during an ongoing complaint process.
Step 4: Escalate to the 8-week deadlock stage If the supplier does not resolve the dispute within 8 weeks, or issues a deadlock letter before 8 weeks, the complaint can be escalated to the Energy Ombudsman.
The Energy Ombudsman's Role in Back-Billing Disputes
The Energy Ombudsman (Ombudsman Services: Energy) handles complaints from domestic customers and microbusiness customers that have reached deadlock with their supplier. For back-billing disputes, the Ombudsman can:
- Direct the supplier to recalculate the back-bill in accordance with SLC 21B
- Award a financial remedy to the customer where the supplier has charged unlawfully beyond the 12-month limit
- Require the supplier to write off the irrecoverable portion of the back-bill
- Award a goodwill payment where the dispute handling fell below the required standard
The Ombudsman's decisions are binding on the supplier if the customer accepts the outcome. Customers who reject the Ombudsman's decision retain the option of civil litigation, though this is rarely pursued for amounts recoverable through the Ombudsman scheme.
Larger businesses not covered by the microbusiness definition do not have access to the Energy Ombudsman. Their recourse for contested back-bills is civil litigation or, where the sums justify it, arbitration under any dispute resolution clause in the supply contract.
Practical Steps to Avoid Future Back-Billing
The most reliable protection against a large back-bill is maintaining a record of actual meter reads submitted regularly. Even where the supplier's system generates estimated reads, a customer that can evidence a sequence of accurate reads submitted in good faith is in a strong position to argue that any under-billing reflects a failure in the supplier's processing rather than the customer's records.
Practical steps include:
- Submitting a meter read at the same time each month and retaining photographic evidence with a date stamp
- Comparing the read on each invoice against the read you submitted and querying discrepancies in the same billing period in which they appear
- Ensuring the Annual Quantity (gas) or Estimated Annual Consumption (electricity) registered with the supplier reflects actual usage if your consumption pattern has changed materially
Frequently asked questions
Editorial disclaimer: This information is provided for general guidance only. For specific back-billing disputes, refer to Ofgem's published guidance and consider contacting the Citizens Advice Consumer Helpline or an independent energy adviser.
Does the 12-month back-billing rule apply to all businesses?
No. The regulatory protection under SLC 21B applies specifically to microbusiness customers as defined by Ofgem. Larger businesses can dispute back-bills but must do so through contractual or common law routes rather than the regulatory framework.
Can a supplier add interest to a back-bill?
No. Ofgem's licence conditions do not permit suppliers to charge interest on amounts recovered via back-billing from microbusiness customers. If interest appears on a corrected bill, challenge it in writing.
What if the supplier claims the exception for customer obstruction?
The supplier must evidence that reasonable attempts were made to obtain meter access or customer reads and that the customer actively prevented this. A supplier that never contacted the business to request a read cannot credibly invoke the obstruction exception.
Is the back-billing rule different for electricity and gas?
The principle is the same for both. SLC 21B applies to electricity supply licences and the equivalent condition in gas supply licences. Both restrict recovery of charges from microbusinesses for energy consumed more than 12 months before the corrected bill date.
What is the deadlock letter and when does it trigger Ombudsman access?
A deadlock letter is a written communication from the supplier confirming that the complaint cannot be resolved internally. Once issued, or after 8 weeks from the initial complaint if no deadlock letter has been issued, the customer can refer the matter to the Energy Ombudsman.
How we verified this
This article draws on published guidance from Ofgem, the Department for Energy Security and Net Zero, and the primary legislation and regulatory sources listed in the Sources section. No aggregator or supplier-produced content was used as a primary source.
