When Kate White received a "very large" gas bill for her empty Sydney home, she was shocked.

News stories about energy prices going up meant she had accepted she would be paying higher prices for her hot water.

But this time she paid particular attention because her Summer Hill home had been vacant for months while undergoing renovation.

She called her gas provider, AGL, and discovered the bill had been estimated.

Ms White then manually entered her meter reading, and the bill more than halved.

The follow-up bill, also calculated by estimation, was $658.68 and after again entering the meter read the bill dropped to just $132.68.

Ms White had never challenged a bill before, because she assumed they were always based on her actual usage.

"It's not easy to see on the paper bill that's it an estimate, it's on the final page right down the bottom in small writing," she said.

Ms White posted on a community Facebook page about her experience and was flooded with respondents who also had no idea this was common practice for both electricity and gas bills.

"I don't think this is fair, in any way, shape or form."

Meter readings and estimations are the responsibility of distributers — in Ms White's case Jemena — who pass it onto the retailer to issue a bill to the customer.

Ms White said an AGL representative told her that Jemena did not always have the resources to send workers out to read people's meters.

Jemena said in a statement it physically read about 93 per cent of meters each billing cycle, and have sent somebody out to Ms White's house on seven other occasions.

How energy companies are using estimates

Distributers, such as Jemena, are regulated by a national body to ensure they are getting actual readings according to guidelines.

The Energy and Water Ombudsman NSW said this oversight prevented estimates being used as a cost-cutting measure.

Retailers, such as AGL, are obliged to "use its best endeavours" to ensure actual meter readings are carried out frequently, and at least once a year, according to the Australian Energy Market Commission's National Energy Retail Rules.

The Australian Energy Market Commission ruled that customers from February 2019 had the right to challenge an estimated bill and obtain an adjustment based on an actual read.

It ruled that retailers would need to indicate "in advance" that a bill would be based on an estimate, and "a range of methods" by which a person could lodge a self-read.

Ms White said she was not given any warning or additional information.

AGL said in a statement that bill estimates were based on a number of factors including "past energy usage and the average usage of similar customers".

"Customers who receive an estimated bill are able to submit their own read directly to us via the AGL App or over the phone."

Jemena said in a statement a "small number of bills" were estimated when meter readers were unable to access meters.

"We also continuously analyse our records to identify customers who have received a number of estimated gas bills, and together with the customer's retailer, work to ensure a physical read of the meter can be conducted."

Meter readers have traditionally required physical access to properties and if that was restricted, for example because the meter was behind a locked gate or there was a dog in the yard, estimates were generated.

But people are reporting their meters are perfectly accessible and still not being read.

Energy and Water Ombudsman NSW records hundreds of complaints about estimations each year, with the vast majority about energy bills, with very few about water usage estimates.

Common yet over-looked practice

Energy consumer advocate Craig Memery said while estimates were important so people were not hit with a bill for six or 12 months' worth of usage, companies needed to better communicate with customers.

"If estimated reads are recurrent, then retailers should go a further step, maybe sending a separate letter to let them know, a note in their letterbox or under their door.

"There needs to be a reason they can't physically read the meter, and they need to let the customer know what that is, so it can be fixed."

Mr Memery said he did not believe energy companies were out to profit by over-estimating, but pointed out it was the customers who ended up paying if their bill was wrong and they did not know to check.

Under-estimations also occurred, and people were then billed for the extra amount, in their next cycle when there had been an actual read, Mr Memery said.

But Mr Memery said the onus was on the meter providers to sort it out.

Smart meters are digital and record energy consumption in at least 30-minute intervals that are transmitted to the energy retailer, and can be accessed remotely.

The Victorian government mandated the rollout of smart meters to households and small businesses in 2006.

In NSW about 30 per cent of households currently have one, which is roughly similar in the ACT, Queensland, South Australia, and Tasmania.

Grattan Institute's energy program director Tony Wood said smart meters would solve many of these billing issues, but acknowledged data security might be of concern down the track.

Billing complaints increase

The NSW Energy and Water Ombudsman received 28,000 complaints this final financial year — up from about 18,000 last year.

It included a 60 per cent increase in complaints about billing estimations.

Energy prices in NSW have risen by 43 per cent over the past two financial years.

Ombudsman Janine Young has never seen the price of power so high and many households are already struggling to pay bills.

"For people that are doing it really tough, that means they might not be putting food on the table for the kids or other things that are really necessary," she said.

University of Sydney's law school energy transition expert Penelope Crossley said the sector was subject "to very complex regulation".

Professor Crossley said most people did not want the hassle of chasing up their energy companies.

"The average energy consumer doesn't want to have to think deeply about their energy bills. They're already worried about cost-of-living pressures, they're flat out," she said.

One survey of 2,500 adults across Australia, conducted by Energy Consumers Australia, found 89 per cent wanted more information about their energy use and costs.

The same survey found 24 per cent of respondents trusted their energy retailer to provide information to reduce their energy bills.

For example, under the current rules, retailers are not required to provide advance notice that their time-of-use tariffs have changed.

What to do when the bill doesn't look right?

Old meters, that are not "smart", should be physically read at least once a year.

Customers have a right to challenge any estimated bill.