Overcharging in the utilities market
This is more common that you'd expect
The UK energy industry is notorious for billing errors, in both the residential and commercial markets. There are many reasons for this, dating back more than 15 years. During deregulation in 1997, the UK energy industry was divided in a number of ways, some which made sense, some did not. Over time these energy companies have merged, been subject to takeover, gone through bankruptcy and so on.
This has resulted in:
- Suppliers have 3 or 4 billing departments, who do not talk to each other, all dealing with different supplies for the same business,
- Some sales departments have computer systems which are incompatible with billing, so that all sales contracts are printed and manually entered in the billing system.
- Another supplier had no system for the gas purchasing team to communicate prices to the sales team; this resulted in the loss of over £200 Million before anyone noticed.
So what does this mean for you? What kind of mistakes are they making on your utility bills?
- Billing for nonexistent supplies. We regularly come across case where meters have been removed or de-energised and yet are still being invoiced for. This is not just standing charges, but consumption too. A factory had an electricity meter removed, but was billed on “actual” reads for 5 years, resulting in an overcharge of more than £48,000.
- Billing for someone else’s energy. Another common error is where a client sells, closes or sublets a site, informs the supplier and assumes that’s the end of the matter. However the supplier may continue to bill for the site, sometimes whilst billing the new occupier as well. For one client, a major sports organisation, nearly 30% of the electricity spend was for a site they had sold 2 years before.
- Wrong Rates. You sign a contract agreeing rates, standing charges, etc, and expect the supplier to bill you those rates. Does not always happen unfortunately, numbers are transposed, day rate becomes night, someone else’s rates are applied to your account, or they ignore the contract and charge you out of contract rates. This covers the majority of errors.
- Faulty Meters. If the meter is faulty, then the supplier is never going to get things right, for example, the meter could record night as day and vice versa, sometimes to the clients benefit, sometimes not. Many meters have a multiplier fitted. This means that for every kwh the meter reads, you have actually used 10, 20, 50 or 100 units. If the multiplier on the meter doesn’t match the bill, you could be charge for anything from double to 10 times the amount of energy you have actually used. This can work both ways, but it is still something to be aware of.
- Other Issues. Estimated reads that bear no relation so realistic usage, for example a client was charged for 90% of their annual gas usage on a June bill, just before a new cheaper contract started in July. In another case the supplier lost the usage data, and so decided to bill based on the previous year – however the client could show that usage had changed drastically, we queried this, the supplier agreed and cancelled the bills, the result 12 months free electricity, around £48,000 saving.