Explainer
Energy suppliers cannot bill households or microbusinesses for energy used more than 12 months ago when the supplier is at fault. Here is how the rule works, the exceptions, how it applies to smart meters and what it means for billing operations.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
A back bill is a catch up bill for energy that was used but not billed correctly at the time, often because of estimated reads, a meter fault or an account that stopped billing. Since 2018, Ofgem rules have limited how far back a supplier can charge.
Standard licence condition 21BA, in both the electricity and gas supply licences, stops a supplier billing or recovering charges, including through a prepayment meter, for units consumed or standing charges accrued more than 12 months before the bill or other charge recovery action. Part A covers domestic customers and has applied since 1 May 2018. Part B extends the same rule to microbusinesses and has applied since 1 November 2018.
Simply not providing meter readings is not enough on its own to remove the protection.
The same 12 month limit applies to smart meters. Ofgem considered a shorter limit for smart meters but kept 12 months, saying it would keep the position under review.
Non domestic customers larger than the microbusiness definition are not covered by the licence condition, although their contract terms and Ofgem’s standards of conduct still apply.
Every account that stops billing is a clock running. Once the gap passes 12 months, the supplier is writing off revenue it can never recover, which turns billing exceptions, unbilled accounts and meter faults into a direct financial risk rather than just a service issue. Our billing exception cost calculator shows how quickly it adds up. Ofgem is also consulting during 2026 on simplifying the supply licence and on outcomes based rules starting with billing, so the wording may change, but the direction is towards stronger protection for customers.
Related reading: billing integrity and revenue assurance, energy billing explained, what Ofgem is and does, Ofgem compliance support.
A licence condition that stops energy suppliers charging domestic and microbusiness customers for energy used more than 12 months before the bill, where the supplier is at fault for the late or incorrect billing.
Yes for microbusinesses, from 1 November 2018. Larger business customers are not covered by the licence condition.
Only in limited cases, mainly where the customer behaved obstructively or manifestly unreasonably, for example through theft or refusing access to the meter without good reason.
Yes. The same 12 month limit applies whatever type of meter is installed.
If your unbilled and exception queues are ageing towards 12 months, that is revenue about to be lost for good. We can help you size it and clear it.