Modern electricity meters are incredibly accurate at recording electricity usage. However, they can sometimes have communication issues. When this happens usage data is still stored on the meter, it’s just not communicated to the provider for the relevant account. As a result, electricity providers will often estimate a customer’s usage and issue bills based on estimates.
As providers will sometimes under-estimate usage, this can result in the customer receiving a large catch-up bill when their actual usage is obtained from the meter – sometimes in a single direct debit. This increases the risk customers will suffer financial hardship and face potential disconnection. The risk of this systemic issue occurring can be reduced if providers take proactive steps to address non-communicating or incorrectly identified meters. It can also be reduced if providers make it clear when a bill is based on an estimate so the customer can provide their own meter reading to the provider.
The impact on the customer can also be reduced if providers have processes in place to identify large catch-up bills and allow customers to pay them back over time, rather than deducting them in a single transaction.
What happened
A business customer took over a factory where it opened up a gym. Unfortunately, the gym’s electricity meter was not communicating electricity usage to the provider.
The provider billed the gym on the basis of estimates for an extended period without sending a meter reader to obtain an actual read. The provider had also been underestimating the gym’s electricity use as it was relying on usage during lockdown.
When actual usage was eventually obtained, the provider issued a catch-up bill of more than $76,000 and tried to deduct this from the gym’s bank account. The customer disputed the usage and the total outstanding balance reached $93,000.
The customer believed some of the usage was related to the factory’s previous owner and raised concerns about the provider’s efforts to obtain meter readings.
What did we look at?
We looked at whether the catch-up bill reflected the customer’s actual electricity usage during the relevant period. We also looked at whether the provider had made all reasonable efforts to obtain meter readings and to explain the risks of ongoing estimated billing.
Finally, we also considered whether it was appropriate to attempt to deduct such a large bill by direct debit without warning the customer or offering them time to pay.
What was the outcome?
The Commissioner was satisfied the catch-up bill broadly reflected the customer’s electricity usage. He was also satisfied the provider had made genuine attempts to obtain meter readings over a lengthy period. However, the Commissioner reached the view the provider should not have attempted to debit such a large amount from the customer’s bank account without any warning or communication. The amount was many, many times more than the customer’s average bill and had the potential to cause the customer significant hardship.
The provider offered to discount the customer’s bill by 30% and offered a repayment plan so it could be paid off over time.
The Commissioner decided this was a fair and reasonable outcome. The Commissioner also took steps to ensure this systemic issue was addressed, copying his decision (and others like it) to the Electricity Authority and the Commerce Commission together with data highlighting the extent of the issue and restrictions in place to limit catch-up billing in the UK and Australia.
Regulatory change
This has led to the Electricity Authority consulting on similar restrictions in Aotearoa | New Zealand and to restrict catch-up bills to six months from 30 October 2026.
