What happens if my energy supplier goes bust?

The current energy crisis has sparked off because the wholesale or ‘bulk buy’ price energy firms pay for gas has shot up by 250% since the start of this year. 

This has put the squeeze on suppliers, especially smaller ones, who lured in customers with super cheap deals, and some including Avro, Green Energy, Utility Point and People’s Energy have now gone bust.

Here’s what you need to know if your supplier goes out of business.

How will I know?

You’ll probably hear it on the news but if your supplier goes bust, don’t panic, as you won’t lose power.

When a supplier stops trading, it’s down to Ofgem, the energy regulator, to find you a new one. Any credit balance you may be owed is protected, and if you owe money to your old supplier, that gets transferred over too.

What should I do?

All you need to do is take meter readings. Ideally take a snap on your phone, and Ofgem say at this stage, if you want to, you can cancel your direct debit with your ‘old’ supplier.

Then sit tight and wait. Once Ofgem’s found you a new supplier, they’ll be in touch directly; although it may take several weeks for your account to be moved across.

If you’re worried about scam companies getting in touch, claiming to be your new supplier, check the Ofgem website as it will flag up details of which company you’re being transferred to.

Will my bills go up?

Yes they will, as any cheap deal you were on, will disappear with your old, now ‘defunct’ supplier.

When you’re transferred to a new supplier, you’ll usually be put on what Ofgem call a ‘deemed’ tariff. This is a special ‘transfer’ rate but it’s bound to be more expensive than any previous deal you were on.

But you don’t have to stick with this as you can ask your new supplier for their cheapest deal and ask to be moved to this. And you’re also free to shop around at this stage and switch to another supplier.

Can I still switch suppliers?

If you’re in the middle of a ‘switch’ from your old supplier, when it goes bust, this should still go through as planned.

However it’s best to hold off starting a new ‘switch’ until you know who your new supplier is.

While ‘switching’ has long since been a fast track to find cheaper deals, some price comparison sites including both GoCompare and Comparethemarket.com have temporarily ‘paused’ their switching services, as deals are so limited.

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