Commercial reference — the cost of getting billing wrong
What back-billing errors actually cost a UK supplier
Four cost lines, one asymmetric equation. Detection is fixed and cheap; failure scales with portfolio size and time undetected. This page prices both sides.
The four cost lines
Unrecoverable revenue
Consumption outside the 12-month window may be unrecoverable where SLC 21BA applies. A long estimate run is only a review trigger; bill dates, consumption periods, under-billing evidence and carve-outs determine the case.
Ombudsman case fees and remedies
Billing is the top complaint category at the Energy Ombudsman. Each case brings a case fee, evidence-compilation time and potential remedy awards — regardless of whether the supplier 'wins'.
Complaint handling cost
A back-bill dispute that never reaches the Ombudsman still consumes contact-centre, back-office and specialist time. Catch-up bills are among the most contact-intensive events in retail energy.
Enforcement and redress risk
Ofgem enforcement on billing failures has produced public penalties and redress packages. The aggravating factor is rarely the error itself — it is the absence of evidence that you were looking for it.
An illustrative portfolio calculation
A small supplier with a modest estimated-reading population. Every figure below is an illustration, not a market average — run the same arithmetic on your own numbers.
- Accounts still on estimates, no actual read in 14 months
- 1,000
- Average unbilled consumption per account
- 3,100 kWh
- Average unit rate (illustrative)
- £0.27 / kWh
- Exposure per account (with 5% VAT)
- ≈ £878
- Share outside the 12-month window (illustrative)
- ≈ 13%
- Illustrative unrecoverable exposure
- ≈ £114,000
Common questions
- How much revenue is unrecoverable under the 12-month rule?
- Any consumption older than 12 months that was not correctly billed cannot be recovered from a domestic or micro-business customer where SLC 21BA applies. For an account on a typical tariff, two years of unbilled consumption can mean half of it is simply written off — multiplied across a portfolio, this is usually the largest single cost.
- What does an Ombudsman case cost?
- Every case that reaches the Energy Ombudsman carries a case fee charged to the supplier, win or lose, on top of the staff time to compile evidence and any remedy award. Billing is consistently the largest complaint category the Ombudsman handles.
- Can Ofgem fine us for back-billing failures?
- Ofgem has taken enforcement action against suppliers for billing-related licence breaches, with outcomes ranging from redress payments to multi-million-pound penalties. Systemic SLC 21BA failures discovered in an audit you cannot evidence are the scenario most compliance teams fear.
- What does prevention cost by comparison?
- An automated audit pass over the billing population is a fraction of one Ombudsman case per month. The economics are asymmetric: detection cost is fixed and small; failure cost scales with portfolio size and time undetected.
Important
Figures on this page are illustrations, not market data or legal advice. Related reading: back-billing rules (SLC 21BA) explained and the estimated-billing audit checklist.
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