Back-billing rules: how far back can a supplier charge you?

A back bill lands when a supplier realises it has under-charged you, often after months of estimated readings, and tries to collect the difference in one go. The rules on how far back it can go depend heavily on the size of your business, and the protection that exists is narrower than a lot of businesses assume.

This guide sets out the current rule, who it actually covers, and what to do if a back bill arrives.

How far back can a business energy supplier bill me?

If you are a domestic customer or a microbusiness, your supplier cannot charge you for gas or electricity used more than 12 months before it takes action to recover the charge, as long as the under-billing was the supplier’s own fault. This comes from standard licence condition 21BA, Backbilling, in both the electricity and gas supply licences.

Outside that protected group, meaning most businesses above microbusiness size, there is no equivalent fixed legal cap. A supplier is still bound by its own contract terms and by the general Standards of Conduct, which require it to treat customers fairly, honestly and transparently, but there is no automatic 12-month backstop written into the licence for a business of that size.

Who exactly does the 12-month rule protect?

Condition 21BA is split into two parts:

• Part A: Domestic Customers. This applies to every domestic electricity and gas customer, immediately, without any consumption threshold.
• Part B: Micro Business Consumers. Condition 21BA extends the same protection to microbusiness consumers, using the definition of a Micro Business Consumer set out in condition 7A. This part of the rule took effect on 1 November 2018.

A microbusiness is broadly a business using no more than 100,000 kWh of electricity or 293,000 kWh of gas a year, or one with fewer than 10 employees (or the full-time equivalent) and annual turnover or a balance sheet total of no more than £2 million. Our guide to microbusiness energy explains this definition and the other protections that come with it in more detail.

What does the rule actually stop a supplier doing?

The licence condition prevents a supplier issuing a bill, or otherwise taking action to recover charges, including through a prepayment meter, in respect of:

• units of electricity or gas that could reasonably be considered to have been consumed more than 12 months before the recovery action was taken, and
• amounts for a standing charge or other supply charge that accrued more than 12 months before that action.

In practice, this means a supplier that discovers an old under-billing error can still bill you for the most recent 12 months of the shortfall, but has to write off anything older than that, unless one of the exceptions below applies.

When can a supplier still bill further back?

Condition 21BA sets out specific exceptions to the 12-month limit:

1. Action taken before the rule applied. Recovery action started before the condition came into force is not affected retrospectively.
2. Continuing an existing, compliant recovery. If a supplier already started a compliant recovery action and the customer has not paid, the supplier can continue pursuing that same shortfall.
3. Obstructive or manifestly unreasonable customer behaviour. If a supplier could not take the correct recovery action for the full amount because of the customer’s own obstructive or manifestly unreasonable behaviour, for example consistently refusing meter access or ignoring repeated requests for a reading, the 12-month limit does not apply to that shortfall.
4. Other circumstances Ofgem specifies. The Authority can publish further exceptions in writing following consultation.

If a supplier tries to rely on one of these exceptions, it is reasonable to ask it to explain specifically which one applies and why, rather than accepting a blanket statement that the rule “does not apply”.

Does this rule cover small businesses generally?

No, not automatically. This is the point that catches out a lot of growing businesses. Since 19 December 2024, Ofgem has recognised a wider Small Business Consumer category, covering businesses that are not microbusinesses but use no more than 200,000 kWh of electricity or 500,000 kWh of gas a year, or have fewer than 50 employees and turnover up to £6.5 million or a balance sheet up to £5 million. This category brings its own set of protections, but condition 21BA itself was not rewritten to extend to it. The condition’s Part B still refers specifically to “Micro Business Consumer”, not the newer, larger Small Business Consumer definition.

That means a business can be small enough to use the Small Business Consumer protections and the Energy Ombudsman, while still being too large for the automatic 12-month back-billing cap. If your business sits in that gap, above microbusiness size but within the small business definition, you do not have the same hard legal limit that a smaller business or a domestic customer has.

Do I have any protection at all if I am not a microbusiness?

Some, though it is less specific. Since 1 July 2024, Ofgem’s Standards of Conduct apply to all non-domestic customers, requiring suppliers to behave in a fair, honest, transparent, appropriate and professional manner, and to give information that is complete, accurate and not misleading. A supplier that suddenly back-bills a small business for several years of under-billing, with no valid explanation for the delay, could reasonably be challenged under this general fairness requirement, even without a specific 12-month rule to point to. It is a weaker position than the automatic cap microbusinesses get, but it is not nothing.

Quick reference: who is protected

Customer type	12-month back-billing cap under condition 21BA?
Domestic customer	Yes, immediately, no threshold
Microbusiness consumer	Yes, since 1 November 2018
Small business (the wider category from 19 December 2024)	No automatic cap; general Standards of Conduct fairness rules still apply
Larger non-domestic business	No automatic cap; general Standards of Conduct fairness rules still apply

Worked example: applying the 12-month limit

This is an illustrative example using round dates to show how the calculation works, not a real case.

Inputs:

• Your business is a microbusiness consumer.
• Your supplier takes recovery action (issues the back bill) on 21 September 2026.
• The under-billing goes back to meter readings from March 2024, over two years earlier.

Applying the rule: counting back 12 months from 21 September 2026 gives a cut-off of 21 September 2025. Your supplier can charge for units it can reasonably show were used between 21 September 2025 and the date of the bill, but, absent a valid exception such as your own obstructive behaviour, it cannot charge for units used before 21 September 2025, even though the original under-billing error started well before that.

Is the rule the same for gas and electricity?

Yes. Condition 21BA appears with the same numbering and broadly the same wording in both the electricity and gas supply licences, so the 12-month limit, the Part A/Part B structure, and the exceptions apply in the same way whichever fuel the back bill relates to. If you have a dual-fuel back bill covering both, check each fuel’s dates separately, since gas and electricity readings are not always taken on the same days.

How did the 12-month rule come about?

The mandatory rule is more recent than many businesses assume. Before it existed, protection relied on voluntary industry commitments. Ofgem’s own record shows that as early as December 2013 it was welcoming fresh voluntary commitments from several major suppliers, including British Gas, EDF Energy, and what was then Scottish Power, to limit back-billing for Britain’s smallest businesses to one year, following Eon and SSE having already done so. These commitments were not legally binding and were not consistently reported on or audited.

Ofgem later put the protection on a statutory footing, banning suppliers from back-billing domestic and microbusiness customers beyond 12 months through standard licence condition 21BA, with the microbusiness element taking effect from 1 November 2018. This closed the gap left by relying on suppliers to keep voluntary promises.

How does this interact with estimated bills?

Back-billing usually surfaces because a run of estimated bills has understated your real usage, and an actual reading eventually reveals the gap. Our guide to estimated bills and meter readings covers the separate rules that require suppliers to try to read your meter at least once a year and to reflect an accurate reading once you give one, which is often the best way to prevent a large back bill building up in the first place.

What should I do if I receive a back bill?

1. Ask for a full breakdown, covering exactly which billing periods, meter readings and rates the back bill is based on.
2. Check your business category. If you are a domestic customer or fit the microbusiness definition, work out how much of the charge falls outside the 12-month window from when the supplier is taking the recovery action.
3. Check for a valid exception. If the supplier is relying on an exception, such as your own alleged obstructive behaviour, ask for evidence of what happened and when.
4. Put your position in writing if part of the charge should not apply, referencing condition 21BA if you qualify for its protection.
5. Escalate through a formal complaint if the supplier does not resolve it, and take the complaint to the Energy Ombudsman after eight weeks or a deadlock letter if you are a micro or small business. Our guide to business energy complaints sets out this process step by step.

If your business is above the microbusiness threshold and a large back bill has caught you out, it is also worth checking whether you are currently on a deemed contract rate, since a back bill combined with deemed rates can compound quickly, and moving to an agreed contract as soon as possible limits how much further it can grow. Once any dispute is resolved, you can compare business energy quotes with us for your next contract.

Frequently asked questions