Bad billing practice by energy companies may hurt SMEs

An energy watchdog has warned that under-charging and supplier mistakes could mean that small businesses could face back-billing demands for up to six years. Crippling energy bills could be presented to thousands of small businesses because of being undercharged by their suppliers for a number of years at a time says Consumer Focus.

Micro-businesses (business with fewer than 10 employees and less than £2m turnover annually) sent over 1,800 complaints to the statutory watchdog for energy consumers about unexpected bills after the energy charge had been underestimated by the supplier.

Energy companies are allowed to back-bill business for up to six years of usage even thought the results are because of mistakes by the supplier, while domestic users can only be back-billed for just one year. And they companies can demand repayment immediately.

Head of Consumer Focus, Audrey Gallacher said that these businesses are not avoiding paying their energy bills deliberately. But when an unexpected bill of over a thousand pounds arrives especially in these trying times it is difficult for them to pay. And on top of that the amount can really pile up since the company is allowed to go back for up to six years.

One significant overhead cost for small business is their energy costs with about 20% saying it amounts to close to 10% of their entire overhead. The average small business spends over £9,000 a year with over 20% paying over £10,000. The Federation of Small Businesses says that small business has suffered for a long time unfair and non-transparent terms with energy suppliers that are uncaring.