Ofgem demands billing explanation from energy suppliers

The regulator Ofgem has asked energy firms to explain how they calculate bills that straddle a price increase.

Ofgem is concerned that some customers may have been overcharged when their bill covers a period before and after the introduction of a higher tariff.

The regulator is worried that firms may sometimes have applied their increased charges to too much of a customer's gas or electricity usage.

News of the enquiry comes on the day that British Gas puts up its prices.

Its average gas tariff is rising by 18% and its electricity prices by 16%. As a result its dual-fuel customers will be charged about £190 more a year.

Ensuring accuracy

The problem of bills being calculated on consumption before and after a tariff increase was highlighted earlier this week.

One of the big-six energy suppliers, EDF, admitted it had overcharged 100,000 customers between October 2003 and May 2010.

When they had rung in with correct meter readings after receiving estimated bills, EDF's automated system had charged all the additional units - if there were any - at its higher tariff rates following a general price rise.

An Ofgem spokesman told the Times newspaper it wanted to be sure customers were being billed properly where there had been a price rise.

"We have written to suppliers yesterday asking each of them to provide details of the approach they take to apportioning price increases and an explanation of the checks they employ to ensure accuracy."

"We also want to understand the way in which estimated and actual bills are reconciled.

"We want suppliers to explain what mechanisms they use when prices are raised to ensure that consumers pay the higher price only for units consumed following the price increase," the spokesman added.

Read the meter

The British Gas tariff increase, announced in July, will affect about nine million households.

Scottish Power has already put up its tariffs, while Scottish & Southern Energy, Npower and E.On are doing so in the coming weeks.

Only EDF of the big-six has so far held off from announcing higher charges.

A British Gas spokesman explained that its forthcoming bills would show "before and after" calculations for both gas and electricity use.

Customers would be able to see how much they had used, and been charged, on both their old tariff and on their new one.

"Customers can read their meters today to make sure the bills are accurate, and also submit their readings to us, so they will be used in the calculation of their bill," said the spokesman.