If you’ve moved house before, you’ve probably had to contact your existing (or new) energy provider to set up a new energy connection.
Sometimes, your provider won’t be able to issue you with a final bill at the time of switching. This is most common if you have a manual electricity meter that requires someone to come to your property to read the meter.
Why catch-up bills exist
If your energy provider can’t close out your account when you switch to a new provider, they’ll issue what is called a ‘catch-up bill’. A catch-up bill essentially backbills you for how much they’ve undercharged you, bringing your account up to date. It’s a fail-safe option for energy providers to recuperate their losses for undercharging you. Undercharging for your energy use may occur because of the following:
Estimated bill read
If you live on a property with a legacy (or manual) electricity meter, your electricity provider will have to send a physical meter reader to record your electricity usage every three months.
However, if your legacy meter isn’t accessible (e.g., obstructed, unsafe), you’ll receive an estimated bill based on your historic usage—that means you could be undercharged or overcharged.
Billing errors
As with any service, sometimes billing errors can occur. This could be due to metering issues, administrative errors, incorrect charges of rates or discounted rates or other issues.
What are your rights when you receive a catch-up bill?
Don’t fret just yet. Rule 30 in the National Energy Retail Rules (NERR) guarantees that certain protections are in place for customers.
Backbilling limit
Energy retailers are limited in how much they can recover, even if that means they have to absorb the loss from undercharging. This is usually expressed in a time limit before you’re informed of the undercharge:
- NSW: Nine months
- VIC: Four months
- QLD: Nine months
- SA: Nine months.
Keep in mind that these rules do not apply if you were solely responsible for the undercharging.
Interest-free backbilling
Energy providers cannot charge interest on your catch-up bill under any circumstances.
Catch-up debt breakdown
Energy providers can’t just leave you in the dark—they are obligated to provide the following:
- The backbilled amount is listed separately from the rest of your current billing cycle.
- Clear explanation for the backbilled amount.
If neither of these conditions are met, a deeper investigation may be in order. Rule 28 of the NERR requires energy retailers to provide up to two years of historical billing data to customers upon request.
If time is on your side, flipping through your historical billing data may reveal billing errors or inaccuracies. If need be, your state’s ombudsman can pursue legal action on your behalf.
Payment plan and extension
If your energy provider undercharges you for months, they are required to offer you a payment plan over an equal number of months (up to 12 months). However, you can nominate a shorter payback period.
What if your rights aren’t being met?
Help is only a phone call or complaint away. If you don’t feel adequately supported by your provider, contact your state’s Energy & Water Ombudsman to assist you in your situation:
- Energy & Water Ombudsman NSW: 1800 246 545
- Energy & Water Ombudsman VIC: 1800 500 509
- Energy & Water Ombudsman QLD: 1800 662 837
- Energy & Water Ombudsman SA: 1800 665 565.
How to avoid catch-up bill shock
If you still have a manual electricity meter at your property, it’s not uncommon to receive a catch-up bill when moving house or switching providers. However, there are a few steps you can take to avoid being caught off guard.
Set up an emergency account for energy
In my living situation, my co-tenants and I automatically debit around $50 per fortnight into a bill shock account, should a sudden water or electricity bill catch us off guard—this is especially helpful during the sweltering summer season.
While the nominated amount might seem small, we use an account with a decent interest rate, meaning the money in there compounds over time, regardless of whether we receive a late bill.
Consider bill smoothing
Bill smoothing spreads your estimated energy costs through the year with smaller, regular payments.
Your energy provider will estimate your future bills based on your household’s energy billing history or from homes like yours if your history is less than 12 months.
Your provider will then divide your annual estimate by your payment frequency to find your recommended payment amount.
This option allows you to better predict your energy costs without the anticipation of a hefty power bill.
Switching energy providers
The first two solutions above focus on how to manage catch-up bills, not how to avoid them. If your provider is persistently undercharging you, you could switch energy providers, or install a smart meter to ensure your energy usage is always tracked accurately.
While price is typically the first motivation for switching energy providers, customer service and value for money matter just as much. Annually, Canstar rates and ranks some of the best electricity providers in the country based on our consumer surveys.
If trust in your existing provider is no longer salvageable, then perhaps it's time to cut your losses and make the switch.
