Is there any legal obligation to tell a supplier they are consistently undercharging for a service?

Question

Back story: Historically my electricity supplier worked on a 3-month billing cycle. They asked for a meter reading (or took their own reading), sent a bill, and I paid it. Rinse and repeat every three months with no problems.

A few months ago, the supplier unilaterally changed to a 1-month cycle. (I suspect their reason is to "encourage" all their customers to install smart meters and to authorize payment by direct debit, but that is beside the point of the question. Neither smart meters nor direct debit payments are mandatory).

The first iteration of the changed system was as expected: supply meter reading, receive bill, pay bill.

Since then, I have been getting monthly requests for meter readings. I supply the readings and get confirmation that the supplier has received them. However I am not receiving any bills. Indeed, each monthly request for a meter reading has an explicit statement that my account balance is £0.00.

The first time this happened I assumed it was just a glitch in their new system, but it has now been repeated for several months.

All messages and payments are electronic (as they were in the previous system), so there is no physical paper trail.

The company website contains a copy of logs all messages sent to me, and there are no messages that were sent but never received (e.g. lost emails).

Do I have any legal obligation to tell the company they are supplying me with free electricity? (Ignore any ethical or moral considerations).

Of course, if and when they company does discover its error, I have no problem with paying the arrears.

Answer 1

To me this seems analogous to failing to report a bank error in your favour, which amounts to theft in england-and-wales. I wrote an answer about that here. See that answer for the details but briefly there are five elements to establish under section 1(1) the Theft Act 1968:

• Dishonesty (section 2)
• Appropriation (section 3)
• Property (section 4)
• Belonging to another (section 5)
• Intention to permenantly deprive (section 6)

As pointed out in the comments, there is a separate offence of abstraction of electricty in section 13 which only has the following elements: dishonesty, use of electricity, and lack of due authority. The courts have also held that electricity cannot be considered "property" for the purposes of the Theft Act (Low v Blease [1975] 1 WLUK 325). Arguably this offence is not commited here as you had due authority (permission from the supplier) to consume the electricity, however I will have a look later to see if I can find some case law on this point and edit it in if I find anything.

With that said, "property" includes choses in action (section 4(1)). Choses in action are intangible property which can only be recovered by enforcing a right rather than by taking possession. In the case of a bank error, the resulting bank balance is a chose in action and the crime of theft is committed on that basis. In your scenario, the right to be paid for electricity you consume is a chose in action belonging to the supplier. Although I'm not aware of any case law specifically on this point, it seems to me that depriving the supplier from its right to be paid could satisfy the requirement of appropriation of property. The other elements of theft, as in the case of bank errors, are easily established here.

Note that you won't be saved by "if and when the company does discover its error, I have no problem with paying the arrears". This is because of section 6(1) of the Act which states:

A person appropriating property belonging to another without meaning the other permanently to lose the thing itself is nevertheless to be regarded as having the intention of permanently depriving the other of it if his intention is to treat the thing as his own to dispose of regardless of the other’s rights; and a borrowing or lending of it may amount to so treating it if, but only if, the borrowing or lending is for a period and in circumstances making it equivalent to an outright taking or disposal.

Even if you eventually pay for the electrity, your intention was not to do so if they didn't notice.

Note also that it is not necessary that there is a contractual requirement to notify the supplier of their mistake. Such a requirement can arise under common law (e.g. A-G's Reference (No 1 of 1983) [1984] 3 All ER 369, elaborated in my other answer).

You didn't specify which part of the UK and this answer may not be applicable in Scotland or Northern Ireland.