We propose a privacy-preserving billing protocol for local energy markets (PBP-LEMs) that takes into account market participants' energy volume deviations from their bids. It enables a group of market entities to jointly compute participants’ bills in a decentralized and privacy-preserving manner. It also mitigates risks on individuals’ privacy arising from any potential internal collusion. We first propose a novel, efficient, and privacy-preserving individual billing scheme, achieving information-theoretic security, which serves as a building block. PBP-LEMs utilises this scheme, along with other techniques such as multiparty computation, Pedersen commitments and inner product functional encryption, to ensure data confidentiality and accuracy. We present three approaches, resulting in different levels of privacy and performance. We also show that PBP-LEMs is feasible for deployment in real LEMs.