What happens when an energy supplier goes bust?
We’re currently seeing unprecedented times in the energy market with the recent increase in wholesale gas prices impacting many countries and leaving some smaller suppliers with little option than to close down.
For customers who have chosen smaller energy suppliers this is an extremely worrying time. If your current energy supplier goes bust, will you continue to receive the energy you need into your home and is the cost of changing to a new supplier going to put more strain on your household income? If you’re worried about your current energy supplier or have found yourself left out in the cold because your supplier has exited the market, here’s some useful advice.
What happens if my energy supplier goes bust?
Don’t worry, it’s not up to you to find a new energy supplier. The UK’s independent energy regulator, Ofgem, will automatically switch you to a new supplier so you’ll never be without the energy you need to heat your home and you won’t lose any credit you’ve built up with your previous supplier. It’s wise to take a photograph of your meter readings for proof of usage before your swap is made. Once Ofgem has placed you with a new supplier, wait until they contact you with details of your new tariff. You can then ask to be moved to a cheaper tariff or start looking for an alternative provider.
Will my energy bills go up if I move to a new supplier?
Your energy bills may well go up in the current climate of rising gas prices although customers of failed suppliers who are switched to new providers are protected by the Energy Price Cap. This is a cap which limits the rates a supplier can charge for their default tariffs. Ofgem sets the cap level for summer and winter based on the underlying costs to supply energy. This keeps prices fair and makes sure suppliers reflect any drops in costs in your bill. This price cap applies if you’re on a default energy tariff because your previous energy supplier has gone bust and if you pay by direct debit, standard credit or a prepayment meter. It won’t apply if you are on a fixed tariff.
Is the energy price cap going to increase this winter?
The price cap is reviewed twice a year based on the latest estimated costs of supplying energy. It was announced that the price cap would be raised from 1st October due to increasing wholesale gas prices. It’s not due to be reviewed again until April 2022.
Recent energy supplier exits and take-overs
You can find a list of the energy suppliers who have left the market so far in 2021 here. Why have these companies gone under? In many cases, small energy suppliers enter the market and offer ridiculously low-cost energy tariffs to entice you to sign up and increase their customer base as quickly as possible. The problem is, more often than not these tariffs are just not sustainable. These suppliers are selling their energy for less than they paid for it on the wholesale market which means they are unable to cover the costs of running a successful business.
What about Your Co-op Energy – are you likely to go the same way?
Absolutely not. Your Co-op Energy insists upon fair and sustainable pricing. We pay our suppliers a fair price and we charge our customers a fair price. We partner our renewable energy offering with Octopus Energy. A large portion of Octopus Energy is still owned by Octopus Group, who run a number of investment funds, including £3.4bn in renewable energy generation. Their incredible solar investment actually makes them the UK’s largest investor in onshore solar (meaning, panels that aren’t on roofs, or on the sea). Over £2 billion has already been invested in Octopus Group’s energy mission so far, and our relationship with them remains a really strong one. We’re one renewable energy provider with staying power – we’re not going anywhere.
If you’ve had to switch energy suppliers but are unhappy with the cost or service you’ve been receiving, why not look at switching to our Community Power tariff? No greenwash, nothing to hide just great value and 100% green.