Eversmart Energy ceased trading Friday, becoming the sixth energy firm to fold since the beginning of the year.
The Manchester-based supplier served 29,000 domestic customers and a small number of business account. All will continue to receive energy as usual through Ofgem’s “safety net” and will be assigned a new supplier by the regulator shortly. They’re urged to sit tight until they’re contacted by their new supplier and not to attempt to switch.
Customers’ credit balances are protected following the collapse of their supplier, but Eversmart’s unusual pricing structure means they could be owed significant sums. The supplier offered a tariff which required customers to pay a year’s worth of bills in advance.
The Family Saver Club tariff was, at its launch in November 2018, nearly £50 cheaper per year than its closest competitor, at £973 a year for a dual-fuel household with typical use. The supplier promised interest of up to 12 percent on the credit balances.
However, consumer advocacy charity Citizens Advice raised the alarm about the marketing of the tariff. Eversmart Energy was presenting the tariff as a financial savings product which it said offered “better value than an Isa or high street savings account.”
Citizens Advice was also concerned about the large credit balances consumers were building up with the supplier—up to £1,000— and cautioned there would be “serious implications” if the practice became widespread in the industry and if such suppliers collapsed.
Eversmart withdrew the tariff from the market in January, reportedly following discussions with Ofgem. But many customers had already signed on and paid hundreds of pounds for a year’s supply with the firm.
Chief executive Gillian Guy took the opportunity Friday to urge the regulator to look into practices that led to customers building up such large credit balances.
“When a supplier goes bust, customer credit balances are protected but all of us will eventually pay for honouring them through increased bills,” she said.
“These regulations provide vital protection for those affected. However, it was never expected that firms would actively encourage very large credit balances. Ofgem needs to act to reduce the cost of supplier failures and protect customers.”
Eversmart’s collapse wasn’t unexpected. The Energy Ombudsman reported it had received 225 complaints about the supplier so far this year, four times the number it had received in the whole of last year. Troubles with switching and billing were the main driver of these complaints.
Last year Eversmart missed a deadline for paying the hundreds of thousands of pounds it owed to a green energy scheme. The supplier had also been hit recently with a winding up order from National Grid.
If you had a tariff with Eversmart, the best thing to do is to take meter readings, wait until a new supplier is appointed by Ofgem to take over Eversmart’s customer books, and then compare the tariff you are set up on with other options available to you using Simply Switch’s energy comparison service.