For those that haven’t noticed, there’s been a little bit of fluctuation in the cost of energy recently. When we say a little bit, we mean of course that prices have spiralled rapidly into the stratosphere. Unfortunately, this has led to several smaller firms going bust, affecting around 1.5 million people.
This might sound slightly worrying. The fear of increasing monthly costs and the possibility of being cut off if your supplier goes under are all understandable concerns.
You’ll be glad to know there are fail-safes in this country to prevent both of these things from happening. We have a price cap that limits the amount companies can charge for energy and a process to ensure homes aren’t cut off – even if the provider finds itself in a spot of bother.
But what exactly happens if you find yourself without a supplier? Let’s take a look.
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You turn on the news to find out that your energy company folded last night, but your lights still work and taps are still hot. During the period that you’re in provider limbo you will still receive energy to your home. While this is happening, Ofgem (the energy regulator for the UK) will work behind the scenes to find you a new supplier. This can take a couple of weeks, so you’ll need to be patient. Once it is complete you will receive a letter from your new supplier explaining the change.
As far as being switched over to another supplier goes, not a thing. However, Citizens Advice has recommended documenting any meter readings or bills. If your account is in credit, then it’s important to take a note of this too as you should be able to claim it back from your old provider. Unfortunately for those in debit, this works both ways. If you owe your old company money then you will still have to pay up and will most likely receive a letter from the administrators.
Ofgem policy is to find the best deal possible for you with whichever new supplier you get switched to. Sometimes new suppliers will honour your existing contract, but often this is not the case, and you’ll get moved onto a ‘deemed’ (standard variable) tariff.
In this case, your bills will likely go up (especially if you were on a fixed rate plan before). You will be free to switch to a new supplier right away though, without incurring any exit fees, and it’s a good idea to do so.
The energy cap is there to ensure that those on default tariffs do not pay exorbitant fees. The UK Government is currently speaking with Ofgem about further raising the cap to ensure more companies don’t go bust. So far it is set to increase by 12% in October and this will affect around 11m people who are all on default tariffs. However we could see other increases soon depending on the scale of the current gas crisis.
Unfortunately not. Ofgem will look at the options for people whose companies have folded and try to secure them the best possible deal. Right now, options are fewer and prices are higher. This means that it is more likely that not that you move onto a more expensive tariff than before.
Luckily you are able to swap providers whenever you want. Having been unceremoniously dumped on another supplier, you also won’t get penalised for jumping ship. One thing that is being advised is to wait for Ofgem to allocate you a new supplier before you start shopping around. This is to ensure that any debit or credit balances can be dealt with before you go shopping.
If your new tariff doesn’t cut the mustard, you don’t like your current one, or are just bored and want to see what’s available then you’re in luck. Use our energy price comparison tool see what deals are on the market right now.