Mistakes by utilities 'crippling' small firms

Thousands of small businesses are being hit by "crippling" energy bills after being under-charged for years, a consumer group warns today.

New figures from Consumer Focus reveal that a government helpline received 1,848 complaints last year from small businesses that got unexpected bills after their gas and electricity charges were underestimated. More than 100 were from Scotland.

The group said the problem was that energy suppliers can "back-bill" businesses for up to six years of usage, compared with just one year for domestic customers, and can demand instant repayment, even if the under- payments are their fault.

Audrey Gallacher, head of energy at the group, said: "Getting a bill for thousands of pounds out of the blue is a nightmare scenario for any small business. With suppliers able to go back six years, supplier mistakes can add up to big debts that could potentially cripple some firms."

She urged businesses to make sure they were paying the right amount, but said energy suppliers shouldn't treat small businesses in the same way as they would large corporations.

Consumer Focus is calling for small businesses to get the same protections that consumers have. That would mean they could only be back-billed for one year if the supplier has been at fault, and would be guaranteed a realistic timescale for repayment.

David Caro, environment and energy policy chairman at the Federation of Small Businesses, said a big unexpected energy bill could be "the last nail in the coffin" for a struggling small firm.

He added: "There is a need for a radical shake-up of the practice of estimated billing, especially when the energy suppliers are in the wrong."

Energy regulator Ofgem recently proposed measures on energy brokerage and clearer terms and conditions for small businesses, but did not tackle the issue of back-billing.