Business Energy Supply Billing: Regulation

Debate between Sarah Edwards and Miatta Fahnbulleh

Tuesday 1st July 2025 Westminster Hall

[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.

Oral Answers to Questions

Debate between Sarah Edwards and Miatta Fahnbulleh

Tuesday 18th March 2025 Commons Chamber

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

We know that people are worried about their energy bills, and that too many are struggling to afford them. We agreed £500 million of industry support, alongside our warm home discount, to ensure that £1 billion of support was available for households struggling with their energy bills this winter. We will continue to take action to support consumers in the short term, as we sprint towards clean power in order to bear down on energy bills for good.

[Sarah Edwards]

In my constituency, a local hospitality business’s energy provider, E.ON, has behaved appallingly by back-billing and incorrectly billing, leaving that business nearly bankrupt. While I welcome the new expanded remit of the Energy Ombudsman, we need to ensure that it has the capacity and powers that it needs to protect businesses. Would the Minister meet me to discuss this case, and what are the Government doing to ensure that our local businesses are not driven to bankruptcy by the outrageous behaviour of energy suppliers?

[Miatta Fahnbulleh]

I am happy to meet my hon. Friend to discuss this case. However, there are clear rules in place to protect consumers from unfair back-billing, and energy companies must comply with those rules. I have met Energy UK, the industry body, and Ofgem to reinforce our expectation that if rules are not complied with, Ofgem will take enforcement action. The broader point is that we have to ensure that the energy market is working for consumers and is fair. We are reviewing Ofgem to ensure that it has the mandate, the duties and the powers—including the Energy Ombudsman—that it needs to be an effective and strong consumer champion.