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Eon Energy Ltd v The Brackley Antique Cellar Limited (Derby CC case No 0QZ05100 14 August 2013) is a landmark case, being the first reported decision in which a customer of a utility supplier has successfully defeated a claim for recovery of charges following underbilling by the utility supplier, writes John Denis-Smith.
The facts were relatively straightforward. The Claimant electricity provider supplied electricity in circumstances where the industry and provision of electricity is regulated by the Electricity Act 1989 but pursuant to a contract with the Defendant, a company.
The Claimant had in 1999 taken over the supply to the Defendant’s premises from a previous supplier. Throughout the period of its supply to the Defendant it would charge on the basis of estimated usage, although meter readings taken periodically by its personnel indicated that usage was actually considerably higher. In particular, although the meter was a 6 figure meter and readings of 6 figures were received, the Claimant would then “correct” the reading to a 5 figure reading or would ignore the reading entirely and provide a new estimated reading.
On some occasions, the Defendant’s own personnel would supply readings, some accurate but on occasion mistaken. Occasionally, the Claimant would not adjust the meter readings and the bill provided would then be accordingly much higher but, when the Defendant queried the increase, the Claimant stated that this was a mistake and changed the bill to reflect the level of billing previously sent. Eventually, the Claimant realised that consumption had been far higher than the estimates and sent a bill calculated by reference to the actual consumption. The Defendant refused to pay and proceedings ensued.
Various issues arose, in particular:
There may be many cases where a supplier misreads or “corrects” its own meter readings and bills on the basis of a lower estimate. In such circumstances it is important for a customer to show (a) that it was not and could not reasonably be expected to have been aware of the underbilling (b) that it acted on the basis of the underbilling. In the case of a business customer, evidence of passing on the costs of electricity to customers will be important evidence going to detriment and whether it would be just for the supplier to recover payment
For utility providers, full investigation of discrepancies between billings and actual meter readings is crucial. If the meter is accurate, “corrections” made for the purposes of billing may prove to lead to irrecoverability of the shortfall. However, if such corrections are made, the customer should be notified, together with a caveat that these are provisional and that, if the reading later proves to be correct, the supplier will be entitled to recover the shortfall.
Where payments are made by reference to a running account (as it usually the case), any appropriation by the supplier to the earliest date should be made explicit. The customer however should ensure that it makes clear that payments made for subsequent supplies are in respect of those supplies and not the disputed bills.
Court: Derby County Court
Judge: Mr Recorder Tidbury
Date of judgment: 14 August 2013
John Denis-Smith is a barrister at 39 Essex Street specialising in commercial and construction work.
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