Energy Companies have to refund overcharges but Water Companies do not, why is this?

Author:  Graham Mann.

The Daily Express ran a story today headline “Millions to get energy pay out as faulty meter clocks blamed for overcharging” Apparently some 3.9 million residents may have been overcharged as their meter clocks may have been faulty. In the light of this there have been calls for the industry regulator OFGEM to take action to ensure those customers that have been overcharged are refunded.

Yet interestingly enough many water companies continue to overcharge customers in many ways and get away with it, why is this?

The gas, power and telecoms regulators apparently have the power to force these companies to act in the right way, if they overcharge then the regulator will investigate and take action to insist they pay up, not so in the water industry it’s different. If a business has been overcharged then a representative of the business will make a claim, most claims are made on behalf of a company have completed a historical water audit. A water expert would normally make the claim together with supporting documentation, sometimes dependant on the type of the claim the water company will refund the overcharges on the water bill in full back to 6 years hiding behind the statute of limitations, whilst other claims are only approved to be refunded back to 1st April of the year the claim was made. Either way most claims for refunds would not be approved in full and the business looses out so you would think a business could then approach the regulator OFWAT? No, not so, if the business is not happy with the response from the water company they are directed to The Consumer Council for Water which is an independent organisation that represents customers interests and is responsible for dealing with customer complaints. The Consumer Council for Water effectively mediates and although they may agree 100% with your claim for a full refund of the overcharges it has no authority to force the water companies to comply and repay all of the overcharges, from a customer perspective the water companies will logically take advantage of this situation knowing the only course of action for a business customer is to take the water company to court and many businesses often don’t and they take whatever refund the water company may offer.

Forcing water companies to repay any overcharges is within the power of OFWAT as back in 2000 they introduced a rebate scheme whereby the water companies had to refund any customers for surface water and property drainage where they could prove the charges were incorrectly levied, interestingly most rebates only went back to April 1st of the current financial year, OFWAT reasoned that because water companies had relied on past years income they would need to increase future charges for all customers to compensate for refunding large back dated rebates. Yet indeed the water companies continue to back charge many £millions every year and the most appalling fact that very few businesses are aware of is water companies can under the Water Industry Act 1991 (WIA 1991) charge you for the services they provide and the WIA 1991 does not specify any time limitation on collecting these charges.

In theory the water companies have a mandate to back charge an unlimited period of time yet the customers do not, the regulator OFWAT therefore falls short of its duties in this respect ensuring water companies provide a quality value for money service and on these issues OFWAT falls on the water companies side, yet the customer does not have the right to reclaim on the same terms.

Water consultants H²O Building Services have experienced many water company claims over the last 20 years, both from submitting claims on behalf of business customers for refunds to dealing with back charges on behalf of business customers, in most instances the replies are the same “it is for the customer to ensure the water bills are correct before paying them” and the water companies appear to accept little or no responsibility fro ensuring the charges they are levying are correct. Often businesses have to employ water consultants who complete detailed and historic water audits, often reporting overcharges and undercharging and negotiate with the water companies on both under charges and overcharges. OFWAT should impose regulations whereby if any water company overcharges in any category then a full refund plus interest should be paid if evidence is submitted showing the water company has had every opportunity to levy charges correctly. Conversely if a water company undercharge for services it should only charge going forwards and not back charge further than the time the water company became aware as charges can accrue as a result of a water company disservice. if this happens the water companies should seriously consider their responsibilities in allowing the back charges to build up and negotiate a compromise on the charges owed with the customer.

The regulator OFWAT must now take a more robust definitive approach to overcharging and insist water companies refund in full all monies overcharged and government must set up a water Ombudsman with the relevant powers to force water companies to comply as the existing system is not fit for purpose. Some water companies are improving their refund policies but we are still along way off all water companies doing the right thing by their customers.

Water company refund due to overcharge.

Water company rebate cheque