Yahoo Movies What happens if my energy supplier goes bust?
If your energy supplier goes bust, the simple advice is to ‘keep calm and carry on’. Your gas and electricity supply will continue as normal and any credit built up with the old provider will be protected.
Occasionally energy companies fail, but there is a safety net in place for customers. There are some sensible steps to take – and, more importantly, actions to avoid. But ultimately, there is no rush to act at all.
What is the safety net?
The safety net guarantees that your gas and electricity supply will continue without disruption or disconnection. While there could well be administrative chaos behind the scenes, you as a customer need only sit tight and await further instructions.
In fact, you should definitely not try to switch to another firm until the company that has taken over your contract gets in touch – and even then you might decide to stay put.
Any overpayments you have made to your old supplier will be protected.
How does the safety net work?
When an energy provider goes out of business, Ofgem, the market regulator, searches for a suitable replacement – known as a ‘supplier of last resort’. One is usually appointed within a few days.
The regulator monitors all energy providers constantly, and all are required to abide by strict licensing requirements. Suffice to say, Ofgem will be aware that a company is in financial difficulties long before it has to stop trading, so the transition to the replacement will be seamless.
Once confirmed, Ofgem will announce the name of the new supplier on its website. This is often shared by traditional and social media too.
Although a new supplier may be appointed quickly, patience is required while waiting for the company to make contact. Don’t worry if you don’t hear anything straightaway.
It is also possible for customer accounts of a failing supplier to be bought by a rival before going bust – known as a ‘trade sale’. This eliminates need for a supplier of last resort, but the regulator still ensures the deal works in the interest of consumers.
There are also separate contingency plans in place to protect customers if a large supplier were to fail. However, a supplier of last resort solution is more likely.
Will my credit be refunded?
If your account is in credit, this will be transferred to the new provider.
Similarly, any debt owed will be transferred over. In some cases, customers would need to repay debt to administrators of the bust energy company. Either way, debts are still owed.
Should I switch?
Do not switch to a new supplier while Ofgem is itself searching for a replacement or while a new supplier is working to transfer accounts. Doing so risks credit being lost.
It could also create confusion about which provider is responsible for supply and bills, which could lead to errors and further delays.
Switching could be a great idea – but only after the new supplier has set up your account.
What should I be doing at this time?
Take a meter reading, set-aside recent bills, and wait for the dust to settle.
A meter reading accurately records usage up to the point a supplier went bust. If you have an online account with the old supplier, log-on and download or print off recent bills for your records. Also, take note of the account balance.
Although there is no strict need to cancel a direct debit to the bust supplier, you may choose to, particularly if there is credit outstanding on your account. The new provider can set up a new payment arrangement once your account is activated.
If you haven’t heard anything for a couple of weeks, contact the new company for an update.
What happens when I’m with the new supplier?
At this stage switching becomes a priority. You will automatically be placed on a ‘deemed’ tariff – one you have not chosen. They can be more expensive.
Energy usage charged at new contract prices will eat into any credit transferred from the old supplier. Switching to a cheaper deal will lessen the impact of this.
Either ask your new supplier to put you on a cheaper tariff or compare across the market for deals. There are no exit fees for customers switching away from a deemed tariff.
When comparing it helps to provide your postcode, the name of your current supplier and the name of your tariff.
Ask the current supplier for details of your annual consumption of gas and electricity. These figures generate a more accurate estimate of how much you would pay on a new tariff.
Those who usually receive the Warm Home Discount – a one-off payment towards electricity bills – should ask if the new supplier offers this. If it doesn’t, consider switching to one that does.
If you have a smart meter, it might not operate the same way under a new supplier. At worst it will become like a traditional meter. This means you must send regular meter readings to your new supplier for bills to be calculated accurately.
What if I started switching when my supplier failed?
If you were mid-switch when your old supplier went bust, the switch will still go ahead. Once complete, cancel your direct debit to the old supplier.
Outstanding credit should be swept up by the supplier of last resort and refunded. Contact the supplier of last resort to ensure your account is closed, and the balance settled.
Will an existing complaint be addressed?
This depends on whether your complaint is still relevant once a new supplier takes over. It may decide to absorb responsibility. However, if it is tied to the actions of the previous supplier it might regard the case as closed.
Redirect your post so correspondence from any supplier reaches you. Update suppliers with your new address accordingly.
If a bust supplier impacts the property you have moved into, wait for contact from the new supplier.
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