Have you ever received a bill that was based on your estimated consumption and you did not know what it meant?
Or maybe you have received an energy bill that was much higher than what you normally pay?
Sometimes when you pay for energy, you are charged based on estimated consumption. That’s why some invoices that you will get are reconciliation invoices that adjust the previous estimates. These invoices are based on your actual meter readings and reflect on your energy usage more accurately. This guide explains how reconciliations work and how to read your reconciliation statements.
Reconciliations explained
Sometimes households and businesses are wrongly billed by their gas and electricity suppliers. Many people forget to submit meter readings each month and instead rely on estimated readings that can often be higher than their real energy use.
When you submit a meter reading to your supplier, the company will look back at your read record to verify whether what they have been charging you reflects on how much energy you use in reality.
The goal of that is to make sure that your bills are accurate and the supplier hasn’t been overcharging you. If that’s the case, you have the right to get a refund. If, however, it turns out that you have been paying less than you were supposed to, you might get a back-bill that requires you to pay any underpayments back.
How to read your reconciliation statement?
Reconciliations statements include many elements and abbreviations that, at first glance, might appear confusing. Nevertheless, reading them is easier than it seems. From the table below you can find out what the main symbols mean.
On the bill, you can also find the present reading and the reading that the supplier had previously. Moreover, you can check what the charges were before VAT and CCL. On top of each reconciliation bill, your meter’s serial number and the date when the invoice was issued.
The company applies your actual meter readings not only to the current month but also to the previous ones. That ensures that you are charged the correct amount for the whole period during which you were overcharged or undercharged.
If you see ‘Chargeable’ on your reconciliation bill that means that you are liable for payment and the supplier has to give you back the money for overcharging you. If the bill says ‘Non-Chargeable’, the company does not owe you any money or you might have to regulate a back-bill.
What do updated reads change?
Based on your adjusted meter readings the VAT or CCL rate can be changed.
- VAT refers to a tax on services and goods that is also applied to the consumption of gas and electricity. In the UK the standard rate of VAT is 20% but it is possible for your business to get a reduced rate of 5% if your consumption is less than 1000kWh of business electricity and less than 4,390 kWh of business gas per month.
- CLL is an environmental tax that businesses need to pay. Its rate is determined by how much energy you use each month.
As both taxes are based on consumption, one month you might qualify for a cheaper rate, and another you might have to pay more. If you qualify for reduced rates but have been paying the higher ones, you can claim the overpayments back.
If these values have been amended your reconciliation bill will state ‘CCL Charge & Recharge.’
What happens if the company has been undercharging you?
So, if the supplier has been overcharging you, you are entitled to a refund. But you might be wondering what happens if it turns out that you have been paying too little for your energy supplies. If that’s the case, back billing might occur and you will get a bill that requires you to pay the outstanding amount.
Back billing is regulated by law and is limited to a period of 12 months. The only instances where you can be back billed for longer than that are if you have been stealing energy, or you purposedly have not been paying the bills. Moreover, back billing can only happen if, during these last 12 months, a business used no more than 293,000 kWh of gas or no more than 100,000kWh of electricity each year.
Back billing limitations
There are some things that can help you avoid paying enormous back-bills.
- The supplier cannot charge you for gas or electricity used more than a year ago.
- Suppliers must include back billing terms in their terms and conditions in a comprehensive manner.
- If the outstanding charges are fully the fault of the company, you might not have to pay them
- If you have done everything you can to avoid back billing, you can discuss the situation with the supplier and they might revoke or reduce the back-bill.
Tips to always pay accurate energy bills
Even though mistakes can happen, and sometimes there is no way of avoiding them, there are a few things you can do to lower the risk of being over or undercharged by your energy supplier.
- Submit your meter readings regularly – if you do it, the company won’t have to come up with estimates.
- Control how much you pay each month – if one month you notice that you pay more or less than usual, you should give your supplier the call and make sure they got the readings okay.
- Check your bills – you should always look at what elements your energy bills consist of. If you do it regularly, you will notice if some charges were added or removed all of a sudden.
- Make sure your meter works correctly – sometimes when meters are not working properly, you might end up paying too much or too little for your bills. Checking your meter regularly helps you avoid getting into complicated situations and having to sort things out later on.
- Switch to smart meters – thanks to the Smart Meter rollout that is happening in the UK, you can change your old meter to a new, smart one. They automatically send readings to the supplier so you don’t have to worry about inaccurate estimates.
Frequently Asked Questions
Is back billing legal?
Many people think that back billing is unfair as these bills tend to be extremely high. While that might be true, unfortunately back billing is perfectly legal. Energy suppliers have the right to regulate any bills that have been miscalculated and collect the outstanding payments. Back billing occurs frequently in the energy industry. Even though receiving a back bill is not your fault, you have to pay it.
How far back can an energy company charge you?
According to back billing rules, suppliers cannot charge you for gas and electricity used more than twelve months ago. Energy companies must include these terms in their terms and conditions. If you have received a back bill dating more than a year back, you do not have to pay for a period that exceeds 12 months.
Can I switch suppliers if I own my current energy provider money?
A short answer to this question is no. Before the switching process to a new supplier can be finalised, you need to settle all the payments with your existing supplier. When you notify your current supplier about your intention to stop using their services you will be issued a final energy bill.