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Calls for protection against crippling company energy bills

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A Yorkshire contract law specialist is urging the Government to step up protection for companies which are undercharged by their energy suppliers over a period of years then belatedly faced with demands for huge payments.

hlw Keeble Hawson logoThe call comes after Michael Peacock, partner at hlw Keeble Hawson Solicitors - one of the region's biggest practices with offices in Leeds, Sheffield and Doncaster - saved a Yorkshire company from a bill of almost £500,000 for alleged underpayment going back 5 years.

Coolcare Logistics Ltd in Doncaster, which stores and transports frozen goods for household names, was unaware that an nPower clerical error when setting up its account resulted in its bills being a fraction of what they should have been.

The account was set up when Coolcare was incorporated in 2005. Five years later the business was shocked to receive a demand for in excess of £477,000 - and discover that energy suppliers are allowed to backdate underpayment claims for as much as six years.

Michael Peacock explained: “Whereas householders are protected by codes of practice and cannot be charged for energy used more than 12 months prior to the presentation of the bill, businesses of every size are vulnerable to such claims.

“This issue has plagued businesses – especially small business – for some time. Whilst the increasing use of “smart” meters which more accurately measure consumption is to be welcomed, it is hoped that Ofgem, the regulator, will bow to increasing calls from business to cap back-dated electricity bills. It is understood that the industry itself has proposed the introduction of a 3-year limit; however, unless and until such a cap is implemented, businesses will remain vulnerable.”

Drawing on a combination of legal arguments and precedents, Mr Peacock had the bill reduced to £80,000 following negotiations with nPower.

Coolcare’s managing director, Sharon Goulding, commented: “When we started out we had no real idea of the energy costs we might incur. We relied on the invoices to be accurate and our business shouldn’t therefore be held liable. The business community must unite to challenge a supplier’s right to backpayments that could amount, as in our case, to nearly half a million pounds.

“That said, following Michael Peacock’s intervention nPower took a very reasonable stance and we’re immensely relieved that Michael was able to save Coolcare the equivalent of more than 20 staff members’ salaries.”

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