Inaccurate billing by energy suppliers is costing UK firms half a billion pounds a year, according to third party intermediary Inenco.
The consultancy says that one in five business energy bills are wrong, and that UK firms could claim that money back in refunds – if they know what they are looking for. However, Inenco says only one in five businesses conduct regular invoice validation and bill audits.
The firm says it reviewed more than 1 million bills in 2016, and analysed 10,000 to identify errors and help determine the scale of the issue for its Mission millions report.
High value errors uncovered by included:
A major supermarket being overcharged £700,000 in duplicate charges; a food manufacturer paying over £300,000 in inaccurate network charges, and a £775,000 refund for a property management agent from paying incorrect rates for a year.
Applying its findings across the £25bn businesses spend annually on energy, Inenco estimates the retail and leisure industry could reclaim £200m, manufacturers £65m, the property sector £78.5m and the public sector £112m.
The firm suggested those figures could be an underestimate, given “energy costs are rising by 25%”, according to chief commercial officer David Cockshott.
He said while the energy supply chain must work harder to cut out errors, business could also help themselves. Billing errors were easily resolved and could result in “significant savings”, said Cockshott, adding that “it would pay for all businesses to undertake some form of invoice validation to check for incorrect charges and ensure they only pay for the energy they use.”
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If one in five bills are “wrong”, does anybody know how many customers are being undercharged by suppliers?
Billing wrongly is the perfectly normal for UK energy companies. In the past The energy regulator Ofgem fined few suppliers for the same.
Something is amiss here. For the past few years, Inenco have claimed on their website and promotional materials to have “£3.4 billion energy under management” (see here, scroll to the bottom: https://web-beta.archive.org/web/20160924005130/www.inenco.com) and to “uncover £6 million in errors every year” (see here: https://www.inenco.com/services/bureau/).
By these “Missing Millions” figures however, if they were really managing £3.4 billion energy they should be uncovering 2% errors i.e. £68 million. So either this report is grossly exaggerated, or they have been misrepresenting the amount of energy they have under management.
I suspect it’s a bit of both – whilst it’s true there are a lot of billing errors in the energy industry, much of the £500 million Inenco are quoting will be attached to major energy users who already identify and fix these errors via in house teams and external consultants.
Any billing errors suffered by smaller businesses that are less likely to be picked up already, are surely dwarfed by the cost of exorbitant hidden commissions added in by the swarm of predatory brokers pervading the market these days. That’s the real story!
It’s a shame that magazines like The Energyst just blindly publish these PR exercises and that there are no journalists in the energy industry looking to get their hands dirty and uncover this type of misleading marketing and other such unsavory behavior we see from brokers.
Hi Mark, thanks for your comments. The story does state that the TPI is applying its findings across total industry spend, and most sample-based research takes the same extrapolatory approach. But you have a valid point in terms of major user validation. Perhaps Inenco will also respond. The Energyst is always interested in what’s happening in the market, drop me a line with any tip offs or angles you think might be worth covering.
Best regards
Brendan Coyne
Hi Mark,
As Brendan has explained, the report looks across the entire business energy market rather than Inenco’s own customer base and the projections are based on analysis of thousands of business energy bills and an informed extrapolation of the estimated cost of these inaccuracies.
The missing millions apply to a far broader group of businesses than major energy users: the report looks at medium and large businesses: whilst SMEs are out of the report’s remit, each year Inenco uncover thousands of instances of medium-sized organisations overpaying by hundreds of pounds each year as well as errors on major energy user bills. Inenco believe that the scale of the issue – and the value recovered on behalf of businesses who do undertake audits – mean many more than the 20% of businesses of all sizes should consider some form of invoice validation.
If you want to find out more about how Inenco work with businesses to find and recover inaccurate charging, or how we ensure transparency of our fees with our customers, do get in touch with me on 01253 785 100.
Dave Cockshott
Inenco