Business Energy Supply Billing: Regulation

Miatta Fahnbulleh Excerpts

Tuesday 1st July 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)]

I thank my hon. Friend the Member for Tamworth (Sarah Edwards) for introducing this important debate, and all hon. Members for their insightful contributions. I assure them all that the Government are taking this issue seriously, and we are working at pace to respond to it.

The experience of Roasters reflects the issues that consumers face in an energy market that, quite frankly, is not working for them. Let me be clear that reforming the energy market so that it works for consumers and is fair is a key priority for this Government. We have made progress already, which I will set out, but we must do more.

I was extremely disappointed to learn of another example of a customer receiving incorrect bills and back-billing requests. Ofgem supply licence conditions are very clear: suppliers must take all reasonable steps to reflect accurate meter readings in bills or statements where these have been provided by a customer or taken by a supplier. Suppliers must also take all reasonable steps to obtain meter readings at least twice annually. They must provide historical consumption information to all customers upon request and explain how a customer’s bill was worked out.

[Sarah Edwards]

I thank the Minister for giving us lots of information on challenges and things that companies should be doing. Roasters café had four different smart meters fitted, none of which worked. When my constituent raised the alarm 12 months in and said she did not feel that the final meter was working, she was told, “It’s absolutely fine—it works. There’s no problem.” As we know, there was a problem; it was not making the readings, and it was certainly not smart. Can the Minister speak about the fact that energy companies are imposing these meters, charging for the privilege of going to check them and then claiming that they still work?

[Miatta Fahnbulleh]

We know we have a challenge with smart meters. The majority of smart meters work, but there are far too many cases where they do not. We are working with the DCC and suppliers to make sure that we have connection across the piece and that there is a clear obligation on suppliers to respond to meters that are not working. Ofgem is reviewing this at the moment, and we will set out what we will do to introduce further obligations and ensure compliance on the specific issue of smart meters.

On the wider question about back billing, let me be clear: suppliers cannot back-bill domestic or microbusiness consumers for energy use more than 12 months ago. A company is classed as a microbusiness when it has fewer than 10 employees and turnover of less than £2 million, or where it falls under certain energy-usage thresholds. In February, the Secretary of State wrote to the chief executive officer of Ofgem, asking him to accelerate the regulator’s work on reviewing the back-billing rules as part of its ongoing consumer confidence reforms. Ofgem is in the process of doing that.

The Secretary of State and I have constant meetings with the regulator to make sure that this matter is proceeding with the pace and urgency it requires. It is very clear that suppliers can back-bill consumers only in very specific circumstances; we need to clarify what those circumstances are and ensure far tighter compliance and enforcement on this issue.

My hon. Friend raised a point about the Energy Ombudsman, and what it should do to support businesses such as those in her constituency. We announced an expansion of the ombudsman’s service in December so that small and medium-sized enterprises with fewer than 50 employees can now access it. That means that 99% of businesses in this country can now access that important service. In recognition of the impact on businesses when things go wrong, the maximum award for new business disputes that go through the ombudsman has been doubled to £20,000.

We know that much more must be done to ensure that the ombudsman and the redress service are working for all customers. We have committed to consulting on a range of issues that would strengthen the ombudsman, including introducing automatic referrals to it rather than consumers having to do that themselves. We think that will speed up the process.

We are also looking to reduce the referral waiting time from eight weeks to four weeks so that customers are not waiting in a long and frustrating process before their issue gets redress. Critically, as part of that, we are looking to increase the value of the compensation that is paid to customers when things go wrong and the ombudsman has clearly put in place a judgment that suppliers are not responding to. We also want to make compensation automatic, because that is how we can expand and drive deterrence in the system.

We will look to see how, in instances of, for example, excessively long call waiting times, which consumers find desperately frustrating, unacceptably high bills when suppliers fail to adjust their direct debits, and suppliers not responding to complaints in time or not complying with the Energy Ombudsman, there can be automatic compensation so that consumers get the redress without having to go through the hassle.

[Sarah Edwards]

I thank the Minister for all the additional details and information on where we are hoping to get to. One thing I learned about was the problem of deemed contracts. When a business moves into a premises, they are put on an assumptive contract, but that has caused lots of problems. The ombudsman and Ofgem have decided that they cannot make any rulings on deemed contracts and when a deemed contract becomes an actual contract, and the issues around the money that is then made. Does the Minister have anything to say about deemed contracts, which contribute to a lot of complaints?

[Miatta Fahnbulleh]

We will raise the issue of deemed contracts with the regulator and the ombudsman. More broadly, my hon. Friend has raised specific concerns about the ombudsman’s approach. There is a clear complaints procedure, so if constituents feel that they have not had the service that they require, there is a process to escalate their complaint up the hierarchy of the ombudsman and consumers should use it.

My hon. Friend also raised the important issue of the Ofgem review, as did other Members. I could not agree more; we need a regulator with teeth that is on the side of consumers. As part of our manifesto, we promised to strengthen Ofgem, to ensure that it can hold companies to account for wrongdoing and require higher standards of performance, and to make sure that customers receive automatic customer compensation for poor service. To address that, in December, we launched a comprehensive review of Ofgem. We are in the weeds of that review, which will conclude in the autumn. Critically for me, the review will establish Ofgem as a strong consumer regulator. It will ensure that Ofgem is equipped to address unacceptable instances of customer failing and, importantly, we want it to reset consumers’ confidence in a system that, quite frankly, they have lost confidence in.

In response to the hon. Member for Dumfries and Galloway (John Cooper), the review will specifically look at whether Ofgem has the right remit, mandate, tools and powers to do the job that consumers expect. We want to ensure that all the examples are represented, so we have done a big call for evidence. We are doing huge amounts of engagement to make sure that all the evidence informs the final conclusions of the review. Critically, it will also look at redress, because we know that we need to get that right. The point has been made over and over again that it is about setting in place the right regulatory framework, but also about making sure that there are repercussions when compliance does not happen, and that there are clear enforcement mechanisms. We want to ensure that the regulator has all that.

We know that the cost of energy is a massive issue for businesses across the country, particularly small businesses. This issue, and the question of whether we cap energy bills for non-domestic customers, was raised by my hon. Friend the Member for Stevenage (Kevin Bonavia) and the hon. Member for South Cambridgeshire (Pippa Heylings). We have taken the judgment that the way that we respond to energy bills that are too high is to sprint in order to deliver clean power and break our dependence on fossil fuel markets so that we can drive down costs and bills for consumers. The shadow Minister is wrong: this is not and never was ideological. We have seen the worst energy crisis in a generation and our dependence on fossil fuels was at the root of that. That crisis, not on our shores, meant that businesses and consumers across the country were paying the price. That is why diversifying our energy mix, whether Members believe in net zero or not, and generating home-grown clean energy that we control are the routes out of this bind and out of volatility. That will deliver energy security for families and fundamentally secure family and business finances.

[Nick Timothy]

The Minister, as Ministers do, made a point about the volatility of gas prices. When wholesale gas prices fell and the price cap was lowered, the Labour party put out posters saying, “Labour have just cut your energy bills.” Will she accept that it was wrong for the Labour party to do that, when that fall was because of the reduction in wholesale prices and nothing to do with policy costs, which were actually increasing?

[Miatta Fahnbulleh]

My words were very clear. We welcome the reductions in energy prices, but we were very clear that we are on a rollercoaster: prices go up and prices go down. We must get off the rollercoaster so that we deliver energy security. That will deliver price stability and fundamentally secure family finances.

[Nick Timothy]

Will the Minister give way on that point?

[Miatta Fahnbulleh]

I will make some progress.

I want to end by addressing the issue of energy brokers, which has been raised. We know that many energy brokers can help businesses to save money on their bills with contracts tailored to their needs. However, we have also seen evidence of opaque charging structures and unfair sales practices. We are hugely conscious of that, and last year the Government launched a consultation on introducing regulation of third party intermediaries such as energy brokers, aimed at enhancing consumer protection, particularly for non-domestic consumers, where we have recognised that there is an issue that must be addressed. The consultation has now closed, and I can assure my hon. Friend the Member for Tamworth that the Government are working through the huge volume of responses that we received and will respond in due course.

Finally, to the hon. Members—

[Jim Shannon]

Forgive me for pushing on this matter, but I did ask about the Utility Regulator in Northern Ireland.

[Miatta Fahnbulleh]

I was just coming to that.

[Jim Shannon]

Isn’t that fantastic? Thank you so much.

[Miatta Fahnbulleh]

That was my concluding point, to hon. Members from Northern Ireland, who have raised a really important issue: we are working closely with the Northern Ireland Government to ensure that the improvements we make in the UK market are aligned and that lessons are learnt to ensure that, where we develop stronger and better practice, it is shared with the regulator and the Northern Irish Government. In the end, we must ensure that we have a system that works for all consumers across these isles.

Let me conclude by again saying a huge thank you to my hon. Friend the Member for Tamworth for raising this important issue, and by offering, if she wishes, to meet to talk in more detail about some of the issues she has raised. I am clear that, without a fair, functioning energy market, our clean power mission will not succeed, energy bills will not come down and consumers will not get justice or access to a system that works for them. That is an absolute imperative for us; that is the priority; that is the thing that drives everything we do. We look forward to working with all hon. Members to achieve that outcome.