Energy guides. What happens if my energy supplier goes bust?
If your energy supplier goes bust, don’t panic. You won’t lose your energy supply. In this guide we explain the process in place to help you.
Why do energy suppliers go bust?
The UK energy market can be a difficult place for smaller companies trying to break in. There are just over 60 energy suppliers providing gas and electricity across the UK, dropping from a peak of over 70 in 2018. The challenge of rising wholesale energy costs is making things difficult for suppliers large and small.
Over a million households have seen their energy firm go bust in the last few years and market analysts expect that number to increase as wholesale prices rise.
When an energy company goes bust, Ofgem (the UK’s energy regulator) appoints a new supplier to look after customers and ensure their supply is not affected.
Thanks to our reputation as a reliable energy supplier, we’ve taken on the supply of more than 10 companies who’ve gone bust, or left the energy market, since December 2019. We’ve been around for more than 200 years, so rest assured we’re here to stay.
What happens when your energy supplier goes bust
As a UK consumer, Ofgem have some measures in place to protect you in the unusual case your energy supplier goes bust.
Supplier of last resort (SoLR )
Ofgem will appoint a new supplier - known as the supplier of last resort or SoLR - so customers keep getting gas and electricity supplied to their homes. The new supplier is carefully selected by Ofgem.
If your supplier goes bust here are some important things to know:
- Don’t worry, you’ll still have gas and electricity
- A new supplier will contact you to tell you they've taken over your energy supply
- If you’re in credit, you won’t lose your money
What do I need to do if my energy supplier goes bust?
When you find out your energy supplier has gone bust, here are some practical steps to take before your new supplier contacts you:
- Take meter readings. For more info you can check out our guides. They’re written for British Gas customers but may help.
- Download or keep any old bills you have – these can help prove your payment history and your credit balance or debt
- Don’t switch to a new supplier straight away – wait until the new supplier appointed by Ofgem contacts you. They’ll explain the terms of the new tariff they’re offering. You might find it harder to get any money you’re owed if you switch before this happens
If your account is in credit
Don’t worry: if your home energy account is in credit your money is protected and your new supplier will tell you how you’ll be paid back. If you’re a small business customer, Ofgem will try to choose a supplier that can refund some or all of your credit, but this isn’t guaranteed. Wait for your new supplier to contact you and they’ll tell you what will happen to your credit.
If your account is in debt
If you owe money the arrangements to pay this back can vary. Either you’ll need to pay back the money you owe to the new supplier (if they agree with Ofgem to take on customer debts from your old supplier). Or, if your new supplier doesn’t agree to take on customer debts, then you may have to pay it back to your old supplier or their administrator.
Do I need to cancel my Direct Debit?
If you pay by Direct Debit you shouldn’t cancel it. This way you keep paying for the energy you use. Your new supplier will tell you what’s going to happen with future payments.
What about my Warm Home Discount?
If you’re eligible for the Warm Home Discount (currently a £140 payment for customers who qualify for certain benefits), check that your new supplier will pay you this. If an energy supplier has more than 150,000 customers, they have to pay. Some smaller suppliers also pay it, even if they have fewer than 150,000 customers.
Shopping around for a new deal
When the transfer is complete, your new supplier will let you know your new tariff. You can then decide if you want to shop around for a better deal. We’ve pulled together a helpful guide to help you compare the different tariffs on the market.
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We offer fair priced gas and electricity for all. Whether you have a pre-payment meter, are looking for a greener option, or are an EV owner wanting cheaper, off-peak electricity so you can charge your electric vehicle for less , we’ve got an energy tariff for you.
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How are wholesale energy prices affecting smaller suppliers?
Wholesale energy costs are the prices energy suppliers pay to obtain gas and electricity which we then supply to our customers. Suppliers, like us, buy most of the energy we provide to you in advance. This is known as hedging. Purchasing ahead helps to even out prices over time. This protects you from big jumps in your energy bills.
For some smaller suppliers it’s very difficult to buy ahead in the same way and they can only buy energy a couple of months in advance. This means when wholesale prices increase, they face pressure to pass on all wholesale increases as soon as possible to their customers or take a loss on fixed-price contracts.
You see that in the way some smaller energy suppliers charge for energy use. Some suppliers, like us, charge you at the end of the month for the energy you’ve used in that month. However, some smaller providers charge you at the start of the month so you pay in advance of using energy.
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