What to do if your energy supplier goes bust

Introduction

With 9 10 11 domestic energy suppliers having gone bust, 9 in the space of just 12 months, it is not surprising that consumers are getting jittery about whether their energy supplier will be the next to fail. And, if they do fail, what should you do about it? Will your energy supply be interrupted? Will you get your money back if you have credit on your account? Should you switch or stay put?

In this guide we explain what happens when your energy supplier goes bust, provide detailed answers to frequently asked questions and provide a handy list of do’s and don’ts.

How likely is it than your energy supplier will go bust?

energy-scanner-ofgem-safety-net

Ofgem, the industry regulator, still claims that “It’s unlikely that your supplier will go out of business.” However, when more than 10% of the players in an industry collapse in just 12 months, saying failures are unlikely just doesn’t soundcredible any more.

Which energy suppliers have already gone bust?

You can find a list of the energy suppliers have already gone bust here.

We’ll update the page with new data as more energy companies collapse. Please check back regularly (if you’re into that sort of thing).

In summary, over the past 12 months, almost 800,000 households have had their energy supply moved to an energy supplier they never chose, put onto a tariff they never asked for, and have had the worry and inconvenience of wondering what was going to happen with their energy supply and with their money (if they had money on account with their energy supplier). All at a time when they probably had far more important things to do.

Now 800,000 households may not sound like a lot, but it already represents 1 in every 30 households which means that, on average, someone on your street has already been affected.

And energy switching was supposed to be easy and hassle-free right?

Well, actually it is. However, dealing with incompetent energy suppliers, billing issues, poor or terrible customer service and bankrupt businesses is most definitely neither hassle-free nor easy. And it’s usually the incompetent suppliers, with poor customer service and billing issues that compound your problems by going bust. But as they say, “shit happens”. So what can you do about it?

Over time we will publish detailed reviews of all the UK energy suppliers to highlight those most at risk of failing. For now, this guide focusses on what to do if you find your energy supplier has suddenly gone bust on you.

In a nutshell

Your gas or electricity won’t be cut off.

The gas and electricity regulator Ofgem will arrange for your account to be transferred to a new supplier.

There won’t be a break in your energy supply when it’s transferred over, but you might end up paying higher energy prices.

Your new energy supplier will contact you with details or your new energy deal, and other arrangements as applicable. They will also tell you what’s going to happen to your credit balance withyour old supplier – which should be protected.

You’re free to switch away without penalty if you don’t like the supplier, or tariff, that you’re offered.

DOs and DONT’s

DOs

  • DO take meter readings.
  • DO wait for the new energy supplier appointed by Ofgem to take over your energy supply.
  • DO compare the new supplier and energy deal you’ve been offered.
  • DO check out who your new energy supplier is to ensure that they don’t have lousy reviews or might even go bust on you again.
  • DO switch away if the deal you’re offered is a lousy one or you’re not keen on the new supplier.
  • DO find out how you’ll get your money back from the new supplier (If you have credit on account with the bust supplier).
  • DO expect the failed supplier’s administrators to contact you about paying back any money you owe (if you owe your old energy supplier money).
  • DO cancel you direct debit with the old supplier.

DON’Ts

  • DO NOT switch away immediately as this may complicate the transfer. Wait for the new energy supplier to contact you first.
  • DO NOT hang around with the new energysupplier if they offer you a lousy deal. To check how your new deal stacks up do a price comparison.

Why pay more for the same energy?

Find and switch to a better deal in minutes.

FREQUENTLY ASKED QUESTIONS

My energy supplier has gone bust. What happens now?

Ofgem, the regulator, will appoint a new energy supplier — referred to as the supplier of last resort, or SoLR — for affected customers. This new supplier is appointed following a competitive bidding process. The process takes only a few days. Ofgem will announce the appointment on their website.

Do I need to do anything?

Take meter readings as soon as you can after you’ve found out that your supplier has ceased trading. Or take a photo. This is quite important.

Why do I need to take meter readings?

There are 2 main reasons.

Firstly, to ensure that any money either owed to you by the failed supplier, or that you owe to the failed supplier, can be properly calculated and accounted for. If the failed energy supplier owes you money then you will want to how much is owed in order to ensure that you get it all back. Conversely, if you owe money to the failed supplier then you want to make sure you don’t pay any more than you need to when the administrator (or whichever organisation has taken over the affairs of the failed company) comes knocking on your door (or email account).

Secondly, once Ofgem has appointed a new SoLR, your new tariff will likely be different from the one you previously were on. A meter reading will help you check that you are being billed correctly on the new tariff rates.

Will my supply get cut off?

No, definitely not. Ofgem, the gas and electricity regulator, will appoint a new supplier to take over your energy supply but this in no way affects the supply of gas or electricity into your property. The appointment of a new supplier is there to ensure that you have a new company contractually obliged to supply, bill and manage your account.

Who decides who my new energy supplier will be?

After a supplier failure, Ofgem will appoint a new supplier following a competitive process where alternative suppliers will express an interest in taking over the failed supplier’s customer base and will then submit the terms on which they are prepared to take on those customers. Those terms will include, for example, the prices that the new energy supplier proposes to charge the new customers it is taking on.

Ofgem aims to make the decision as soon as possible after an energy supplier ceases trading – this is usually within a matter of days. The result of the new supplier chosen is announced on the Ofgem website.

How do I find out who the new energy supplier is?

Ofgem will publish details of the newly appointed SoLR on their website. If you don’t check the Ofgem website regularly – let’s face it who does – then the new energy supplier should contact you to advise you of the terms on which they are taking over your supply. They should do this within a few days of being appointed.

If you sign up to our newsletter (scroll down to the bottom of this page), we’ll update you with new supplier failures (and SoLR appointments) as and when they happen.

What happens to my old energy supply contract?

That will end as will your old tariff.

The new supplier will put you onto a ‘deemed’ contract (this means a contract you haven’t chosen). This contract will last for as long as you choose not to change it.

What price will the new energy supplier charge me?

It is possible that your energy prices will increase; you won’t know until the new supplier gets in touch and tells you what those new rates are. Although Ofgem has a duty, amongst other things, to try and get you the best possible viable deal during the SoLR process there is nothing to prevent those new energy prices being a little, or even a lot, higher.

Once you know the details of the deal you’ve been offered, make sure you do a quick comparison to ensure you are not being ripped off.

Important – you cannot be charged an exit fee for leaving your new deemed contract even if your old energy contract had not yet ended and had an exit fee attached. Your old contract died with your old energy supplier. Your new deemed contract cannot come with exit fees attached.

What if I was on a fixed rate tariff?

Unfortunately, the fixed rate contract you were on will end at the time you’re moved onto the supplier of last resort. Your old tariff died with the failed supplier.

Should I switch supplier as soon as my energy supplier goes bust?

Ofgem always says no but never really explains why not.

It is feasible that customers leaving during the transfer process between suppliers may complicate things and for that reason it probably is better to stay put until you know who the new supplier is and what deal they have offered you.

In particular, if you have a credit balance on your old energy account (meaning that the bust energy supplier is still clutching onto of your hard-earned cash) then we would recommend that you stay put until the new supplier contacts you. Then make sure to ask them about getting your money back.

Once you know what the deal is then it’s time to shop around.

Why pay more for the same energy?

Find and switch to a better deal in minutes.

What if I don’t want to be with the Ofgem-appointed supplier of last resort?

There is nothing forcing you to stay with the newly appointed SoLR.

Once the new supplier has been appointed, they will be responsible for informing you of that they are taking over your energy supply. At that time they should also explain that you are free to compare and switch supplier at any time. If that’s what you want to do then here is the place to do it.

What it I’m already in the process of switching energy supplier?

No need to do anything. The switch to a new supplier will progress as before.

I’m in credit with my old supplier. Will I get this money back?

Under the Supplier of Last Resort (SOLR) provisions, customer deposits are protected.

What that means is that the new energy supplier appointed by Ofgem will be responsible for paying back any outstanding credit. When they contact you, they will explain how this will work.

I have a debt with my old supplier. Will I still pay this to my new supplier?

This is where it starts to get a bit complicated.

It depends on what your new energy supplier agrees with your old supplier’s administrators (the company appointed to handle the winding up of the failed business).

If the new supplier has agreed to take on customer debts from your old supplier then you will need to pay back the debt to the new supplier

If the new supplier has NOT agreed to take on customer debts from your old supplier then you will continue to owe the money to your old energy supplier. This debt will usually be collected through the administration / bankruptcy process for the old supplier.

The new supplier, once appointed, is responsible for explaining what arrangements have been made and what you need to do.

If this sounds like a right pain in the backside, then we sympathise. That is why it is important to check out the energy supplier that you’re switching to before switching. If they go bust it could get a little complicated and who needs that.

I recently closed my account with my old supplier account which still had money in it. Will I get back my money back?

You should…..

On this, the Ofgem site says… “We’ll look to appoint a new supplier who will pay back money due to customers that’s outstanding from closed accounts.”

That sounds more like you probably will but it doesn’t read like a cast iron guarantee.

Is it 100% guaranteed that my deposit is protected?

Very good question. We are not insiders to the process so have no definitive way of knowing. Ofgem claims that the SoLR process is robust (although they would, wouldn’t they).

However, on the flip side, Co-operative Energy, who took over the energy customers of failed supplier GB Energy Supply, suggested that the transfer process might not be as robust as claimed. The then CEO of Co-operative Energy said that they found that “It has revealed a lot of flaws in the process,…..” and that the supplier of last resort process needed fixing.

As far as we know, customers have not yet lost out any in the early energy supplier bankruptcies. So, for now at least, things seem to be working. Fingers crossed.

What should I do about my direct debit?

There is no reason to keep your old direct debit open during the switchover and we recommend you cancel it as soon as possible to avoid complications. The exception is where you owe your supplier money in which case leaving it open will allow the administrator to keep collecting any money you owe.

Your new energy supplier will contact you to explain how they will take on your account, including any direct debit arrangements. If you decide to stay with them you will need to set up a new Direct Debit mandate in any case, so absolutely no point keeping the old one going.

What happens if I have a smart meter?

Your supply won’t be disrupted and the type of meter you have doesn’t affect this.

The question is whether your meter will continue to operate in smart mode. If the new supplier can’t operate your smart meter in smart mode – because their systems are not compatible with those of your old bust energy supplier – then your smart meter will work in ‘dumb’ mode. This means you will have to go back to taking meter readings manually and sending them to your new supplier.

What if I have a prepayment meter?

Things can be a little more complicated for prepayment customers during the transfer process, for example where you need emergency credit applied to your account of if you lose your top up token or key.

Prepayment meter customers are protected under the transfer rules in the same way that customers with credit meters are. Any prepayment credit balances are protected and any credit which has been loaded onto your meter can be used as normal. If you’ve been paying off debt through your meter, that should carry on as usual aswell.

If you need a new key or other equipment to top up the meter, your new supplier should sort this out as a priority.

You should also check with the new energy supplier where your nearest top-up point is as it might not be the one you’ve been using.

You will still be able to get emergency credit, though the amount you can get might change. Your new supplier can tell you how much emergency credit will be available.

If you experience any issues contact the new energy supplier once you know who they are.

I made a complaint to my old supplier. What happens now?

As your supplier has gone bust your complaint will almost certainly have died with them.

You could try raising the complaint again with the new supplier. They will review it to see if it is still relevant. Chances are that it probably won’t be but we’ll leave that for you to decide whether it’s worth it.

What about business energy customers? Are deposits protected?

Afraid not.

Unfortunately, as with just about everything else in the business energy market you, the customer, are on your own.

Ofgem’s safety net protects domestic customers’ energy supplies. Business customers’ credit balances are NOT protected under the Safety Net. As a business customer you will need to contact the company’s administrator and lodge your claim with them.

Got a story you’d like to share?

If your energy supplier has gone bust and you have an interesting story you’d like to share then please get in touch. You can either leave a comment or get in touch via our Contact Form. Adding comments is subject to our Terms and Acceptable Use Policy. We reserve full rights over what we publish and please understand that we may need to take measures to ensure the validity and accuracy of any comments submitted before doing so. Please therefore don’t get offended if we don’t publish your comments.

Last update: 13 March 2019