Overpayments for energy should be taken seriously by UK businesses, and it may be possible to recover such payments from energy utilities. Every commercial customer with an electricity or gas supplier should, at a minimum, carry out an assessment of recent invoices to verify whether there are any clear billing discrepancies or issues with charges, especially if they have entered into a new supply agreement. If the commercial customer suspects that they have overpaid against any filed and activated energy supply contract, but are unable to reach a resolution with their energy utility supplier, there is an extended playbook available.

However, before considering any potential recovery of an overpayment, the best course of action is to ensure that the commercial customer has fully documented all relevant financial transactions with that supplier and verified whether there is a business case for seeking redress directly with the supplier or whether approval is required from other third-party intermediaries. The energy supplied is the primary reason for the charges, but ultimately the measured data behind the bills and the supplier’s execution related to those services establish the potential to resolve any overpayment issues. Subsequently, the focus must shift to the ultimate decision with respect to the supplier.

2. Understanding Overpayments in the UK Energy Market

Over the last few years, many businesses across the United Kingdom have experienced overpayments to their energy utility companies. The UK energy market, with its complex rules and regulations, offers multiple avenues for customers to recover such overpayments. Nevertheless, just as businesses take care to document and check their utility billing information, there is also an argument for stronger scrutiny and better record keeping by energy supply companies. While it is ultimately the responsibility of the customer to prove an overpayment, utility regulators also have roles to play in protecting clients from inaccurate billing and ensuring greater industry accountability.Articles about overpayment recovery, however, tend to centre on customers of large energy suppliers and overlook UK businesses. Sectors such as local government and health service trusts have sometimes been able to recover significant amounts from utility suppliers, either directly or through regulatory determination with the energy regulator, Ofgem. Other businesses, too, may have grounds for successfully claiming back these seemingly lost revenues.

Once supervisors are satisfied that sufficient evidence of the overpayment exists, the first step toward recovery is to approach the relevant energy supplier on a supplier, by supplier, metering point basis. Larger suppliers generally have a dedicated complaints team or specialist members of staff and will look to resolve issues directly. For disputes that are deemed unresolved, longer-established companies offer a statutory disputes process through a series of escalation stages that lead to independent adjudication. But how is this process triggered? Is it sector-specific, or open to all? Are there special procedures in place for energy supply companies that are charging the government? If the dispute relates to a matter of policy or wider industry management, it is possible to refer it to the energy regulator, Ofgem.

3. First Steps: Documentation and Verification

The first step in any recovery is ensuring the claim is valid. Check energy usage against the contract quantities (if any), which are either set by negotiation with the supplier or defined by the government for the ‘Default Tariff’ offered to specified consumers. For claims under £100, payment patterns and actual outgoings can provide guidance. Missing invoices may still allow claims by checking frequency and amount against account-statement totals. Missing records can delay verification, especially for tax repayment claims, but suppliers should hold this data for at least seven years, and HMRC requires VAT data for six years.

An unusual price dip immediately after a crisis or major project might indicate Recovery. In such cases, verifying the original costs, including any premiums for High-Risk Blocking or High-Risk Special Approval Contracts, is prudent. Applying a similar price for the Recovery Quantities is advisable, with the amount being either the difference or the Recovery Quantity multiplied by the percentage price reduction multiplied by the contract price.

4. Identifying Recovery Pathways

A key question businesses face after confirming an overpayment is, “How do I recover this money?” Risk managers should verify the overpayment is valid and not due to increased demand—claims of “overpayment” from heightened consumption can be dismissed. To undertake the recovery process, finance leaders depend on the scale of the identified overpayment.

There are various avenues to explore when recovering overpayments to energy utility suppliers. Starting with the relevant energy supplier is often the most productive route early in the process. All suppliers holding a master supply contract in place for greater than twelve months should have a statement of account: an extract from the supplier’s balance sheet reflecting the standing of your account.

4.1 Contacting Your Energy Supplier

It is prudent for business teams to contact the relevant energy supplier directly. An indication that the balance is a 2nd or 3rd reminder or final demand will raise alarm bells. A well-structured e-mail for recovery will help clarify and provide comfort. This will include a statement of the account and balance, an indication of what period the statement covers (i.e., recent, dated, month/year at a minimum), highlight that it has been obtained from the supplier, and state how long the balance has been identified. If this balance is a final demand or is a contract termination notice, it would be highlighted even further.

Up until the July/August 2021 period, most discussions with energy suppliers were limited to planning for the recovery of overpayments. More recently, however, discussions are being regulated around recovering or preventing termination or enforcement and re-education of suppliers regarding neighbouring suppliers actively supplying the site.

4.1. Contacting Your Energy Supplier

Both SP Energy Networks and Scottish Power Transmission are subsidiaries of Iberdrola, whilst SP Energy Networks is a division of the U.K. company, SSE Plc. National Grid Electricity System Operator is regulated by the Gas and Electricity Markets Authority and is a subsidiary of National Grid Plc, which undertakes electricity transmission, gas transmission and distribution, and renewable energy generation. National Grid Electricity Transmission owns and maintains the electricity transmission network in England and Wales, and is regulated by the Gas and Electricity Markets Authority.

The address for National Grid Electricity System Operator is: National Grid House, Warwick Technology Park, Gallows Hill, Warwick CV34 6DA. Phone: 0345 166 0033. Email: customeroperations@nationalgrid.com. National Grid Electricity System Operator can also be contacted via the website. Companies can contact the company by the details set out above if a company has any questions or queries about this process. Read the National Grid Electricity System Operator company profile.

4.2. Using Supplier Dispute Resolution Schemes

Should your own company’s attempt to have an overpayment on your energy bill rectified prove unfruitful, there are supplier dispute resolution schemes that can bolster your request. All energy suppliers must be members of one of two schemes: the Energy Ombudsman or the Alternative Dispute Resolution Entity (ADR). The choice of scheme is dictated by the supplier itself. Their aim is to settle disputes on matters such as service quality and complaint resolution but both can also assist in securing refunds for excess payments. Any energy company in the UK that is a member of one of these schemes is obliged by Ofgem to follow the routes laid down to resolve scheduled disagreements. Therefore, if a supplier fails to provide the expected resolution in its stated time frame, it has effectively breached its own policy and is vulnerable to an approach from one or both of the schemes.

Either the Energy Ombudsman or an Alternative Dispute Resolution Entity can be contacted. The chosen course depends on the particular situation. However, for all advances a clear and definitive summary of the grounds for seeking the refund should be prepared, along with copies of the past correspondence with the supplier. Clients of the Energy Ombudsman can also avail themselves of its specifically targeted complaint-handling services, which cover matters such as recovering payments against an unacknowledged or unresolved dispute.

4.3. Ofgem and Regulatory Avenues

While many billing letters may state that a utility supplier’s decision is final and cannot be appealed, energy providers in the United Kingdom are subjected to strict regulatory oversight from the Office of Gas and Electricity Markets (known as Ofgem). Indeed, energy companies must comply with strict statutory obligations as determined by the Energy Supply Licence Conditions, Standard Conditions or Mandatory Requirements for the Gas and Electricity Supply Licences, whichever is appropriate for the supply offering made to the relevant customer, and their own internal procedures.

The Energy Act 2010 established an arrangement whereby independent bodies become the first point of contact and resolution for certain classes of customer complaints. These bodies apply negotiated solutions that Energy suppliers are required to accept. If a solution cannot be reached, the body can refer the complaint to the supplier. In the event of no resolution, the customer then has a further right of escalation to Ofgem. Any customer complaints relating to code, licence or legislation requirements for gas and electricity must be directed to Ofgem. Therefore, businesses finding it difficult to get satisfaction from their Energy supplier should not assume the situation is hopeless; however, contacting Ofgem is normally a last resort, as Energy suppliers are usually given the opportunity to resolve matters first.

4.4. Billing Discrepancies and Metering Issues

Permanent monitoring solutions make it possible to ensure that the utility meters are functioning correctly. Incorrect metering not only can create significant claims due to the impact on the energy cost, but it can also incur non-compliance penalties depending on the industry operated. These penalties or excess charges are typically not claimed in the customer’s favor. Therefore, it is also important to verify all utility bills to ensure the correct metering of all sites.

When dealing with One Bill / One Account, it is important to monitor the individual utility bills of each location. Insurance utility suppliers are known to apply a blanket figure for many services supplied across multiple utilities in the UK. This is one of the many checks that high-level checks can miss but will be picked up at a detailed customer validation review.

TfL check how much is being removed by the utility supplier through the front-end checks and what is being applied in the back-end by the utility customer. Not all suppliers pay money when claiming for removals, and where the front-end checks are missing, a significant amount can remain unclaimed.

5. Case for Data and Audits: Proving the Overpayment

Overpayments to energy suppliers can be difficult to prove, particularly in competitive markets where it is common practice for suppliers to delegate aspects of the billing process to third-party organisations. Such intermediaries can include meter asset providers, meter operators, data collectors and data aggregators. Consequently, the burden of proof is often placed on the customers and, if necessary, their legal advisers.

As a crucial auxiliary step, finance or procurement teams must consider whether sufficient and appropriate evidence is secured, in any format suitable for the task in hand, before any work on the dispute commences. Depending on the magnitude of the overpayment, this may involve careful analysis of key reports from the supplier and other parties, requests for data sets and reports from other parties, or higher-level audit requirements. The latter may have to be framed in terms of both the quantity and quality of audit evidence needed and the types of opinions sought. These audits should be scoped and planned not with a view to placing blame on the supplier, but to identifying the reasons for the overpayment, with the aim of Future Cost Avoidance.

6. The Negotiation Playbook

If you suspect an overpayment, the worst response is to sit back and wait for the energy supplier to offer a refund. Suppliers naturally favour their own cash position. This section outlines the principles of negotiation with energy suppliers.

Even in cases with clear evidence of overpayment, avoid adopting an adversarial approach if possible. Opening discussions with a collaborative mindset can often be more constructive than demanding a credit on the spot. Instead, ask what information the supplier requires before a credit can be considered.

Where the supplier successfully explains the need for additional data, switch from adversarial to negotiating mode. Instead of responding defensively, acknowledge the comments, emphasise a desire to avoid future issues, and offer assistance in obtaining the requested information.

If additional verification is required, inform the supplier when the data has been gathered. When providing information, it often helps to emphasise the most important pieces. Consider how the supplier is likely to react to the information and whether the supplier’s response may require further explanation.

Negotiations with energy suppliers do not conform to trading rules. An energy supplier is under no obligation to grant any concession whatsoever. However, experience suggests that suppliers are often willing to issue credits where they have to concede one but may be reluctant to initiate that process. Accordingly, the strength of the supporting information is critical.

An extra effort should be made to handle the negotiation well if the size of the claim is substantial and if there is any uncertainty about the accuracy of the analysis. In such cases, the negotiation should be approached with the same professional thoroughness as would be applied to a major deal with an outside vendor.

7. Dealing with Third-Party Intermediaries

In some instances, the energy supplier for a business may not have been contacted directly, but a Third-Party Intermediary (TPI) is acting on behalf of the business customer. An example of such a service is a Group Purchasing Scheme for energy. The indirect approach may enhance the ability to mount a case to recover the overpayment but can also increase complexity.

Many TPIs charge a fee. If the TPI has a contractual arrangement in place in advance with a supplier, for example, that any overpayment should be paid by the supplier to the TPI, consideration should be given to how that contractual obligation fits with any direct relationship the business customer may have with the supplier.

8. Timing, Deadlines, and Statutory Considerations

Properly resourced and understood, the potential for recovery of overpayments to energy utility companies can significantly benefit a business. Overpayment recovery is, however, constrained by time considerations and statutory dead lines. It is essential for finance and procurement teams to be aware of key timings, to establish systematic processes to support it and to use the information requirements ahead of those deadlines to avoid being forced to rely on protracted negotiation.

Most utility companies’ terms and conditions set a six-year time limit for a business to claim an overpayment. However, utility companies are obliged to follow the recommendations outlined in the P276 modification to the Balancing and Settlement Code by members of the Balancing and Settlement Code Committee (BSCC). P276 states that settlement at the correct (or even estimated) levels is fundamental to the integrity of the electricity market and therefore should happen in real time and not be postponed to settlement period 12 (six settlement periods after the event or a six-month cycle) or later. The development of the OFGEM stall also means that a contractual claim for recovery does not preclude the OFGEM path as well, either in parallel or subsequently.

9. Best Practices for Risk Management and Prevention

Following sound energy risk management and risk management principles protects a business from the headache of overpayments and eases recovery. Some key checks:

– Any Sudden Changes? What do the Energy Charges & Rates Report, price increases and reviews in your energy supplier’s own advice mean – are you about to pay more? – Verify all changes: Are metering arrangements correct? Are all account details, including address and EIC code up-to-date? Are any Third-Party Costs due for a re-assessment? – Monitor consumption. An unexpected step-change in energy consumption is likely to be suspicious; react accordingly. – Revisit your procurement procedures and reduce the sources of error. Involve finance and environmental experts and, when applicable, clearly identify all POs for energy. Ensure energy contracts automatically switch at the end of term. Ensure any new or amended demand projects have the appropriate lead times. Involve finance in the renewal process – it is easier for them to pay for the right contract at the right time than to make sense of a mis-sold PICAP contract later. – Don’t stop at current consumption. Run an annual check back to see all previous accounts and transactions. Suppliers often assign credits, back-billing is less common. Unexpected gains can appear many months later. – Review the full range of supply options regularly. Don’t be afraid to ask for amendments to new contracts. It doesn’t look good to pay three times more than your neighbour. Also consider joining an eligible energy hedge/management program.

10. Practical Checklists for Finance and Procurement Teams

**In partnership with Davis Grant** Dealing with continual and significant energy price movements presents a real challenge to businesses, and it’s easy to forget that energy suppliers and associated companies are among those with whom you have to reconcile costs for a service. A combination of the crisis amid the rising LNG prices, increased competition in the European and UK energy markets, and Energy Companies Obligation (ECO) subsidies has resulted in changes in the price at which energy is being procured, transported, and distributed. It is quite likely that overpayments have been made by energy users that require recovery. Special negotiation skills are usually required.

As energy prices settle, energy buyers are pressured to investigate other sources of overpayment that can help ease the burden on financial performance. Regardless of whether your organisation is liable for VAT, or a statutory body or charity, potential opportunities have arisen for businesses in a number of areas, subsections and sectors within the UK energy market. These opportunities for recovering past overpayments may include discount claims, ADR (alternative dispute resolution) schemes against energy suppliers, in-depth analysis of initial account data and associated metering details, and complaints regarding third-party service providers.

The following checklist can help finance and procurement teams exploring potential overpayment issues. Are the following steps in train?

– First, check the costs that appear on energy bills and other paperwork from energy suppliers (they may not all be direct charges on the energy bill).

– Next, check to see if any of the supplier’s products or services have errors or been provided incorrectly.

– Check if the current supplier is charging for services on which charges cannot be levied.

– See if the energy buyer has a need to engage the financial ombudsman service or a sector-approved body to help resolve a dispute.

– Consider the risk of not engaging with the supplier to investigate issues thoroughly, and whether a poorly constructed response from the supplier, or the lack of a detailed response, is raising the issue more clearly and effectively.

– Lastly, review the timeframe for potential overpayment recovery. Statutory Limitation Act 1980, Petersfield v East Hampshire District Council, and Gillooly v Ecole Public, Scunthorope.

11. Conclusion

In the United Kingdom, a misconception among businesses is that energy suppliers are beyond reproach. This misconception is pervasive, causing affected companies to overlook the possibility of rectifying overpayments. Supplier overcharging, whether a common occurrence or simply due to supplier error, leaves businesses with empty pockets and numerous questions, such as: Could we have been charged for a site that does not exist? Have we paid an incorrect VAT rate? Could we have paid an inaccurate PAS digit to the wrong geographical source? The answer to each of these questions may very well be “yes.” The objective is not to establish the existence of an overpayment but to restore money that suppliers have taken without cause.

A pragmatic playbook for restoration guides unhappy businesses through their recovery. It explores the actual steps required, the common complications (and ways around them), and the practical documentation necessary to ease resolution. In the worst cases, it provides the necessary escalation points if resolution stalls. Even the best suppliers make mistakes, and a professional recovery is an entirely reasonable expectation. All energy costs reside within the supplier–customer relationship, but this does not suggest they are without risk.