What happens if my energy supplier goes bust?
Learn what to expect at each step, and what you can do if your energy company goes bust
2021 has seen a string of small energy suppliers going into administration, as rising costs and an energy price cap squeezed revenue. The list includes Avro Energy, Green, People’s Energy, Igloo Energy and Pure Planet.
The energy watchdog, Ofgem, has a “safety net” procedure to ensure that affected households can keep the lights on and don’t lose any credit balance they had. We explain how this works, and what your options are at each step. The system applies in England, Scotland and Wales; the energy market works differently in Northern Ireland – see the regulator’s site for more.
Step 1: Ofgem picks a supplier of last resort
If your energy supplier fails, Ofgem’s advice is to sit tight, take a meter reading, and make a note of your account balance, if you know it. You might want to consider cancelling any direct debits you’d set up to pay your supplier.
Ofgem will select a “supplier of last resort” to take you on as a customer. The watchdog asks suppliers to bid to take on the failed firm’s customers. This process usually takes a few days and you should be told who your new supplier is by letter or email. Ofgem will also publicise the decision on its website and via social media.
The new supplier is typically a larger energy company. For example, customers of now-defunct People’s Energy were moved to British Gas.
In some cases, Ofgem can’t find an alternative supplier. If this happens, then Ofgem and the government appoint a special administrator to continue running the failed supplier to guarantee that your energy supply doesn’t stop.
Step 2: Your tariff ends and you’re moved to a new supplier
Once a new supplier is found, your existing tariff will end. The new supplier will put you on a special or “deemed” tariff. Sadly, you don’t get to choose this tariff, but it will only last as long as you want it to.
The switching process should be completed in around 2 weeks, but this can vary depending on factors on both the new supplier’s and the failed supplier’s side.
Step 3: Your account credit will be refunded
If you had any outstanding credit with your previous supplier when it went bust, your credit will move over to your new supplier and you should get the money refunded. The new firm will contact you to explain this process. The cost of any energy you’ve used but haven’t yet been billed for will come off the outstanding credit from your old supplier.
If you owed money to your previous supplier, that debt will carry over to the new supplier, so you’ll still need to pay it.
Step 4: Stay with your new supplier – or switch again
Once the switch to your “deemed” tariff with the new supplier is complete, you have some options.
You can stay on that tariff, or switch to another tariff with the same supplier, or you can switch to another supplier. It’s smart to check whether you could be paying less at this point.
Can I switch if my supplier goes bust?
It’s not a good idea to try and switch straight away after learning that your supplier has gone bust, as this complicates the process of ensuring that any credit balance you had with your original provider is kept secure.
But you can switch away from the “supplier of last resort” that Ofgem moves you to, once that first switch is complete.
What happens if I was already in the process of switching away from the supplier when it went bust?
If you’re in the middle of switching suppliers when the firm you’re switching away from goes bust, your switch will carry on as planned. You don’t need to do anything.
Once the switch is complete, your direct debit with your old supplier should be cancelled automatically.
Can I be charged more by a new supplier?
Yes, you can be charged more by the new supplier appointed by Ofgem to take you on as a customer.
If you’re charged more, this can be for a variety of reasons, including that the new supplier may have to buy more wholesale energy at short notice to ensure its new customers are kept supplied. Given the problems the UK has been having with rising wholesale gas prices, it’s likely that you’ll be charged more by the new supplier, as its costs are likely to have risen.
From October 2021, Ofgem will increase the energy price cap, which means that most energy companies are likely to increase prices for many customers. The price cap is a limit that the regulator puts on the amount that suppliers are allowed to charge customers on “default” or variable energy tariffs. The cap currently affects around 15 million households.
Will I get a refund if I’m in credit to a supplier that’s gone bust?
Yes, if your account was in credit when your supplier went bust, your new Ofgem-appointed supplier will have to refund any credit balances, minus the cost of any energy you’ve used since your last bill.
“This is a hugely unsettling time for millions of energy customers. It’s particularly worrying for many on the lowest incomes who’ll be facing the double whammy of rising fuel bills and a benefits cut”
— Dame Clare Moriarty, chief executive of Citizens Advice (September 2021)
Which energy suppliers went bust in 2021?During 2021, the following energy suppliers went bust:
- Bulb Energy (22 November 2021). Placed into "special administration" by Ofgem.
- Pure Planet (14 October 2021). Customers moved to Shell Energy
- Colorado Energy (14 October 2021). Customers moved to Shell Energy
- Igloo Energy (29 September 2021). Customers moved to E.ON
- Symbio Energy (29 September 2021). Customers moved to E.ON
- ENSTROGA (29 September 2021). Customers moved to E.ON
- Avro Energy (22 September 2021). Customers moved to Octopus Energy
- Green Supplier Limited (22 September 2021). Customers moved to Shell Energy
- Utility Point (14 September 2021). Customers moved to EDF Energy
- People's Energy (14 September 2021). Customers moved to British Gas
- PFP Energy (7 September 2021). Customers moved to British Gas
- MoneyPlus Energy (7 September 2021). Customers moved to British Gas
- Hub Energy (9 August 2021). Customers moved to E.ON
- Green Network Energy (27 January 2021). Customers moved to EDF Energy
- Simplicity Energy (27 January 2021). Customers moved to British Gas
While you won’t be able to choose the tariff that you’re moved to if your supplier goes bust, you are free to switch again once the Ofgem “safety net” system has moved you over.
Sadly, prices are likely to keep rising for energy customers, which makes it even more important to check whether you’re overpaying for your gas and electricity.
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