What should I do if my energy supplier goes bust?
Avro and Green Energy collapse with others forecast to follow: What should you do if your energy supplier goes bust?
Seven suppliers have gone bust in the last five weeks due to rising costs Many are concerned their provider may collapse in the coming days We reveal what you need to do if your energy supplier ceases trading Have an energy question? Contact: experts@thisismoney.co.uk
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Another 830,000 customers have found themselves without a supplier after Avro Energy and Green Energy collapsed yesterday.
They are the latest providers to go bust as the energy industry continues to suffer in the wake of rising wholesale prices.
The crisis has been sparked by the lack of natural gas being produced as well as an increase in demand.
As a result, seven suppliers have gone bust within the past five weeks as they failed to buy enough wholesale energy to keep supplying their customers at the, often low, rate they promised.
Seven suppliers have gone bust within the past five weeks, thanks to the wholesale costs
Many consumers are now concerned their supplier could cease trading with some experts predicting there will be just 10 providers left by the end of the year.
Below, This is Money reveals what you should do if your supplier goes bust.
Stay put?
Those who are with a supplier that has collapsed are advised by Ofgem to stay put and not switch away.
This is because consumers might find it harder to get any money they are owed if they switch before this happens.
Instead, the regulator will find consumers a new provider through the supplier of last resort system, a process that can sometimes take a few weeks.
For example, Utility Point customers, who found out last week the firm had collapsed, have now been told they will automatically be moved to EDF.
Customers are advised to wait for their new supplier to contact them as they will explain what will happen with your account.
Only contact your new supplier if you don’t hear from them within two weeks.
While you are waiting to hear from your new provider, if you have an online account, it’s a good idea to log into it, check your balance and download any bills.
It is also useful to take a meter reading, a note of your account balance and keep any old bills you have.
Do not cancel the direct debit until your new account with the new supplier is set up.
If your account is in credit your money is protected and your new supplier should tell you how you’ll be paid back.
For those who are with a supplier that has collapsed, they are advised by Ofgem to stay put
However, if you are a small business customer, while Ofgem will try to choose a supplier that can refund some or all of your credit, this is not guaranteed.
If you were paying a debt to your old supplier customers will still have to pay this back.
‘Deemed’ contracts
When customers are moved to a new supplier, they will be put on a special ‘deemed’ contract which is a contract they haven’t chosen and not the fixed deal they may have previously had.
Deemed contracts can be more expensive because the supplier takes on more risk, for example, they might have to buy extra wholesale energy at short notice for new customers.
Therefore, they charge more to make up for it. As wholesale prices are increasing as it is, these contracts are likely to be pricey.
However, Ofgem said it will try to get the best possible deal for customers.
While customers can switch away once they are moved to the new supplier, in the current climate it may be difficult to find a good value fixed deal.
In fact, it may be worth moving to a default tariff, which, whilst usually considered pricier, are capped at £1,277 a year as of 1 October, thanks to Ofgem’s energy price cap.
An Ofgem spokesperson said: ‘We know that the current situation with high wholesale energy prices is putting pressure on customers and energy companies. This is a global issue.
‘We have the systems and processes in place to ensure that customer needs are always met.
‘For those customers who are with energy companies that can no longer trade, a new supplier will be appointed.
‘Ofgem is working closely with government to manage the wider implications of the global gas price increase.’
