2020 has been a catastrophic year for so many aspects of society. Businesses are going bust almost weekly due to the COVID-19 pandemic. Two energy firms Gnergy and iSupply, have already gone bust this year; but you don’t need to worry if this happens to your energy company, as energy market regulator Ofgem have a safety net.
In this guide we will answer your most frequently asked questions about what happens if your energy company goes bust and what you need to do.
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Ofgem will appoint a new supplier, referred to as the supplier of last resort (SoLR), for the affected customers. This new supplier will be assessed by Ofgem and selected as quickly as possible to ensure that you don’t experience any disruption in your energy service.
Ofgem puts your case ‘out to tender’ and energy supplier will compete against each other to give you the best deal. Once Ofgem appoint the supplier, that supplier will then contact you and offer you their ‘deemed tariff’, meaning you haven’t chose it and it has just been allocated to you.
First of all you must take a meter reading straight away. You can then wait for the new supplier to get in touch to present their new tariff to you. If you don’t think it is a good enough offer, then you are free to shop around for a cheaper energy deal.
If you pay for your energy via direct debit, then advice suggests sticking with it – your new supplier will discuss future payment details with you.
First and foremost, Ofgem focus on making sure that the new energy supplier can ensure customers continue to receive gas and electricity. The new supplier must meet the following guidelines:
When the new supplier contacts you, ask them to put you on the lowest tariff whilst you shop around for the best deal. You will not be made to pay for refusing the new tariff and could still find a cheaper energy deal elsewhere.
If you decide to stay with the supplier of last resort, the contract will last no longer than six months. At that time, the rates must change to the supplier’s “normal rate”, which is likely to be their current standard variable rate.
Traditional prepayment customers are protected by the Ofgem safety net. Prepayment credit balances are already protected, as any money which has been loaded onto your meter can be used as normal. As a priority, their new supplier will send them any new keys or other equipment needed to top up their meter and you should continue to use this as you did before your energy supplier went bust.
Part of Ofgem’s selection process will mean they are sure the new supplier is able to supply all types of customers with energy and this includes prepayment customers. The new supplier will be able to provide a new key to top up your meter if you contact them.
The ‘Big Six’ energy suppliers are British Gas, EDF Energy, E.ON, Npower, SSE and Scottish Power. In 2004 they held a combined market share in the UK of 100%. As of Q3 2019, their combined market share fell to 70% for electricity supply and 69% for gas supply. With over 50 companies to choose from now, the energy market has opened up for some cheaper energy alternatives which means there are deals out there.
But smaller companies are more likely to go bust given the financial climate at the moment. That being said, smaller suppliers often offer cheaper energy prices than the ‘Big Six’, with some also offering better levels of customer service – a bit of research and using Simply Switch’s energy comparison is crucial to finding the right deal with the right supplier for you.