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Small businesses to fight unfair bills alone following demise of Energywatch

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Small businesses are being pursued for tens of thousands of pounds in backdated utility bills after having their meter readings miscalculated by some of the UK's largest energy providers. The demise of Energywatch, which has been merged with the National Consumer Council and Postwatch to form a new consumer champion, Consumer Focus, means that businesses will be left to fight these bills without the support of a dedicated watchdog. The FPB is warning that many firms will cease trading if they are forced to pay.

FPB member Julia Barnett owns Barnett Fare, a bakery in Cornwall. The firm's average annual energy bill is around £15,000. Mrs Barnett is being pursued by E.ON over a backdated bill of more than £40,500. Although her meter was being read correctly, the bills that arrived were too low.

"They recently sent a letter arguing we have not been contactable on numerous occasions, which is rubbish," said Mrs Barnett. "They also claim they have been unable to gain access to clarify the meter readings – but we have been having our meter read throughout this, the last time being six months ago."

After months of negotiations, E.ON have offered a 25% reduction and the bill will now be backdated for only six years, which is the maximum time period allowed in law.

"My reply was that it's a start. I insisted on having the offer in writing and am now going to get back to them with a proposal," she said. "The whole point is that, despite our concerns that they were undercharging us, we were reassured that everything was under control and that our account was ok, only to find that the readings were not being processed correctly by their computer system."

In August 2007, Kevin Curson, of K J Curson Farms in Norfolk, was retrospectively billed for £134,562.47 for the period from 28 July 2003 to 31 July 2007. He was told by his energy company, EDF Energy, that there had been a meter error. When he refused to pay, Mr Curson was charged an additional £10,000 ‘security fee'.

In a letter to Mr Curson, EDF Energy's Senior Account Administrator, Pippa Holland, said the error was related to the ‘metric constant', which is a fixed value used to convert meter readings into energy use. She added: "The meter constant has been changed from the original setting of 1 to the correct setting of 10."

"We have been paying off £6,000 per month, but I still think we shouldn't be paying anything at all, it's unfair. We missed two payments in March and, when I was away, they threatened to come round and cut our supply off – my daughter was so upset," said Mr Curson."

"With everything that's happened, we want our day in court to ask them to justify how they can march in and impose back charges involving this amount of money because of their own incompetence."

Along with Consumer Focus, a new complaints handling system has been brought in to deal with the UK's smallest companies – those with 10 employees or less, a turnover not exceeding £1.6 million and with an electricity consumption of not more than 55,000 KWh (or gas of not more than 200,000 kWh).

However, the FPB is concerned that businesses falling outside these criteria will not be protected. In addition, unlike Energywatch, Consumer Focus does not investigate complaints made by businesses unless their supply has been cut off and they are deemed to be ‘vulnerable' customers.

As part of Ofgem's new ‘complaints handling standards', businesses are expected to first complain directly to their energy companies.

"Initially, it was very difficult to get hold of the same person at E.ON. When I managed it they were very restrained in what they could do because of the company's internal systems," Mrs Barnett said. "Speaking to someone higher up was virtually impossible and I had to repeat the same information over and over again to different people."

"There's now no protection for small businesses in this situation. Since our case came to light, many business-owners have been in touch who thought they were the only ones facing these bills. We should band together – individually it's difficult to counteract the enormous scale of these big energy companies, which seem to have no idea about grass-roots businesses."

Another major problem with the new scheme is that, if a complaint is passed onto the energy ombudsman, the maximum compensation available is a paltry £5,000.

"I've recently spoken to someone who was originally billed for more than £300,000, and another for £1million who has sadly now gone out of business as a result. These figures put the £5,000 maximum compensation in perspective," said Mrs Barnett.

"I'm still determined to get a better solution. I want people and the powers that be to be made aware that this problem exists for an awful lot of businesses throughout the UK. There needs to be a safety net, something to be put in place to protect small businesses from this kind of back-billing."

The FPB believes microbusinesses should be given the same support as domestic customers and that protection should be available for all small businesses with up to 250 employees. Currently, energy companies are able to back-bill businesses for up to six years, but many charge for eight years. The FPB believes that this should be reduced to one year, as with domestic customers. There should also be an independent first-tier advice for business customers and an increase in the scope of the redress scheme.

The FPB is advising its members that there are steps they can take should they receive a back-dated bill:

1) Always put everything in writing. Verbal comments from either side are of no value.
2) Remember that your contact at the provider involved is more interested in their debt reduction target than in finding a solution to help you. They have a limited number of options available.
3) If you are having problems with the provider's account manager, it will do no harm to write to a senior official; they have more options available to them.
4) Always use the words "this matter is in dispute". They may not able to cut off your supply or take you to court while the account is disputed.
5) Produce a precise list detailing the problem from your point of view.

For more information about the FPB's lobbying and membership offerings, call 0845 130 1722.

Media contacts

John Walding

01565 626 016

john.walding@fpb.org

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