Last updated: 14 November 2021
40 domestic energy suppliers have now gone bust, 18 of those since the begining of August 2021. It is therefore 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?
Energy supplier failures are a big inconvenience to consumers, for sure. The customers affected have to endure getting their energy supply shifted, while the unpaid bills of the failed energy supplier, which can run into £10’s of millions, get loaded onto everyone else’s energy bills. On top of that, there is cancelling and setting up new direct debits as well as having to check that any credit you have with the bust energy supplier gets properly credited back to you.
In this guide we explain what happens when your energy supplier goes bust. We provide detailed answers to frequently asked questions and provide a handy list of do’s and dont’s.
If your energy suppplier has just gone bust
If your energy supplier goes bust, you do not have to accept any new energy deal you are offered by the new supplier who takes over your energy supply.
In normal market conditions we would recommend that you do an energy price comparison to see how the energy deal you have been offered stacks up with other energy tariffs in the market. However, these are not normal conditions.
On a positive note, the new tariff you will be offered is subject to the energy price cap.
On the not so positive note, it means that you will see an immediate hike in your energy bills; possibly by as much as 60%. And unfortunately, with energy price cap tariffs being the cheapest tariffs in the energy market at the current time, there is nothing you can do right now to get your energy bills down. Short of turning off the lights and turning down the thermostat that is. And it will get worse before it gets better. When the energy price cap is adjusted again, on 1 April 2022, it will go up, by a lot. Based on our analysis of forward wholesale energy prices, our energy price forecast is for an increase of another £350-£400.
For now, you just need to sit tight and tough it out. The situation will improve. We expect the outlook to turn brighter from Jan 2022. When things imporove and energy switching comes back, we will be the first to let you know.
In the meantime, this guide will take you through how the process works and what actions you need to take.
How likely is it than your energy supplier will go bust?
Ofgem, the industry regulator, claims that “It’s unlikely that your supplier will go out of business”. However, when 18 energy suppliers implode in just 3 months, saying failures are unlikely just isn’t credible.
Admittedly, we are experiencing exceptional energy prices and energy price volatility at the current time. That has pushed the cost that energy suppliers pay for the energy they buy to way above the level that many of them can sell it for (because of the energy price cap). Rapidly rising wholesale energy prices on the one hand, and the energy price cap on the other, have been the main contributory factors to the recent explosion of energy companies going bust.
However even in normal market conditions, energy suppliers go bust on a not infrequent basis. Ofgem calling it unlikely is not just not credible, it is also misleading. It will continue to happen, and it could happen to your energy supplier.
Which energy suppliers have already gone bust?
You can find a complete list of all the energy suppliers that have gone bust here.
We update the page regularly with new data as more energy companies collapse. Please check back (if you’re into that sort of thing).
So far, in 2021, 20 domestic energy supppliers have gone bust. Over 2.45 million households have had their energy supply moved to a different energy supplier. If your energy supplier has gone bust, then you are now with an energy supplier that you never chose,, on a tariff you never asked for. You have the worry and inconvenience of wondering what will happen to your energy supply and any money you had on account with your now bust energy supplier All at a time when you alomost certainly have far more important things to do.
Now 2.45 million households may not sound like a lot, but it already represents 1 in every 11 households. This means that, on average, several people in your street has already been affected.
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 of your new energy deal, (and other arrangements as applicable). They will also tell you what’s going to happen to your credit balance with your old supplier – which should be protected.
You’re free to switch away without penalty if you don’t like the supplier, or the tariff, that you’re offered.
DOs and DON’Ts
- DO take meter readings.
- 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.
- 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 failed supplier).
- Expect the failed supplier’s administrators to contact you about paying back any money you owe (if you owe your old energy supplier money).
- Cancel your direct debit with the old supplier.
- 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 energy supplier if they offer you a lousy deal. To check how your new deal stacks up do an energy price comparison.
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 very 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 back 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 had. 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 express an interest in taking over the failed supplier’s customer base. Those interested energy suppliers will submit the terms on which they are prepared to take on those customers. The terms will include 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 energy 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 likely that your energy prices will increase; you won’t know exactly 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. It is worth noting that most of the energy suppliers that fail have unsustainably low prices. This means that when they fail, the new supplier will likely not be interested in matching prices on which it will likely lose money.
Once you know the details of the energy deal you’ve been offered, make sure you do a quick comparison to ensure that 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.
IIn practical terms, customers leaving during the transfer process between suppliers can complicate things. 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.
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 energy supplier has been appointed, they will be responsible for informing you 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.
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?
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.
Ofgem claims that the SoLR process is robust (although they would, wouldn’t they). We are not insiders to the process so have no definitive way of knowing.
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 customers with prepayment meters. For example, where you need emergency credit applied to your account of if you lose your top up token or key during the transfer process.
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 it for you to decide whether it’s worth it.
What about business energy customers? Are deposits protected?
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.