Energy billing errors: The cause and the cure

Energy billing blunders hurt supplier and customer. But miscalculation is not the same as misjudgement, so the ways to prevent errors must also differ.


By Trevor Loveday, on behalf of GoCardless

Billing errors by energy companies are a bane to many customers and ultimately to the energy industry too. The repercussions of billing incorrectly are infamy and mistrust as the established players all know. Ultimately it creates a threat of greater state intervention in the fundamental operation of energy businesses. But there are means available to suppliers to address the causes of bad billing.

The damage that comes with billing errors is amplified by perceptions of the energy industry as taking excess profits from a product that’s fundamental to life. Overcharging and unannounced bills are often perceived as unfair, even exploitative, by politicians, regulators and, most importantly, by consumers.

The impact of those errors on energy suppliers in an increasingly competitive market threatens revenue, investment and limits opportunities for business development. And they have now fuelled opposition criticism to the point where renationalisation is on the agenda.

A real problem

The nature of the errors that have emerged over years ranges, but there is no shortage of examples.

The tale of the £50,0000 energy bill for a three-bedroom semi grabbed headlines, but the majority of bills fall into categories that involve wasting householders’ time and causing intense distress, especially to vulnerable individuals. For people on low, fixed incomes, their entire year’s budget can be shattered by an unexpected £50 cost.

And significant distress is not limited to the hard up – The Daily Telegraph has campaigned strongly on energy billing errors. Its documented repercussions of billing errors have included at least one couple being denied a mortgage because an energy company put a non-payment note on their credit record in error.

Comparison website uSwitch calculated recently that:

  • more than a million UK energy consumers were overcharged in 2017 by, on average more than £79
  • bills didn’t match meter readings in more than 30% of instances
  • in 8% of cases, there were incorrect Direct Debit deductions
  • in 5% of cases, bills were mixed up with other peoples'
  • Companies averaged more than a month to refund overcharged customers.

The root causes

How then does the energy industry make mistakes with at the level and frequency it has made them?

The chief causes of billing errors include new IT systems, old and faulty metering, and company neglect of billing rules. But an abiding element to most if not all of them is error by people.

Companies miscalculate invoices – examples might include putting a customer on the wrong tariff or inflating an estimated bill. Or even omit to send them before dropping a huge aggregate charge on the unwitting user. When periods billed for overlap, the customer can end up being charged double for the overlapping days. These are all mistakes and we all make them.

But having made obvious errors, suppliers have too-often deepened the wounds to their reputations by being less than transparent in their handling of the complaints that followed. The hapless couple who were refused a mortgage were subsequently told to wait up to two months have the mark on their credit record removed. That is a process that can be wrapped up in a day.

More typical responses include foot dragging by suppliers in remedying mistakes. There are records of householders making requests again and again over months for a bill without receiving one, or informing suppliers that they are being billed for a neighbour’s energy or a customer having to assure the energy firm that he wasn’t dead.

The errors can on occasion be made at a strategic management level. An example that has made the headlines in recent times has been the appearance of a significant hike in direct debit payments following the expiry of an introductory offer.

One of the most damning sequences repeated by a number of energy suppliers is to deny responsibility or delay compensation only to immediately cough up when the media come knocking. The abiding impression that creates is that the company was trying to get away with it.

Errors in addressing valid complaints about errors are damaging to the business and a lost opportunity. The opportunity is to show a prompt and helpful response to customer complaints which can improve the relationship between a business and its clients and reflect well on the firm’s wider reputation.

Prevention better than cure

Bad treatment of customers who complain following incorrect billing might be addressed better through training, better company policies and possibly more power within customer service to deal immediately with complaints might be advised. But in dealing with the initial billing errors it’s not a matter of skills or training.

Most of these errors are avoidable since they are the product of manual handling. Where someone in the company has to press a button, download a file or enact something to bill a customer.

And the remedy is digital.

Application software used by Direct Debit provider GoCardless – which services some 30,000 business in various fields, enables companies to prevent billing goofs by eradicating human error from the Direct Debit billing process.

GoCardless payments API can detect instances of double billing – when a supplier inadvertently sends two payment requests – and delete the duplication automatically.

Smart metering is also capable of eliminating the abundant source of human error in meter readings taken either by company staff or customers. But to date only nine million smart meters out of more than 50 million required have been installed. Until that is complete, errors in meter reads will persist. The public spending watchdog, the National Audit Office is to look into that programme and publish this summer.

The human touch

Where human judgement can’t be avoided, better skills might be the answer. Staff better versed and empowered in handling complaints about billing errors would be a way forward. And a more customer-centric focus by management might be the solution.

But ultimately manual mistakes are not best remedied by training programmes for staff. Even the best-trained and diligent people make errors. Digital technology is the solution to human error – a view that aligns well with European energy industry thinking for the future.

According to research findings published last autumn by consultant, CGI, energy firms see competition, quality of service and customer satisfaction with products as about equal when asked to name their three major battlegrounds. And more than three out of five companies see price transparency as the area where digital technology can bring the best returns. So investment is going into billing platforms and customer self-service.

European energy utilities are looking to artificial intelligence to up their responsiveness in customer service. The emphasis throughout is on using digital capability to get closer to the customer in ways that go “beyond the meter,” according to the research report.

This has been an ambition that has ebbed and flowed among utilities since the early years of privatisation but the technological capacity is now up to the task. So a spot of digital care and attention in cleaning up the billing process could go a long way towards realising that ambition. Then energy suppliers need only appoint the right people to say sorry on behalf of the management and demonstrate contrition for bad calls with appropriate compensation.

Trevor Loveday is an independent writer and communications consultant.

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