What can you do if your energy supplier goes bust?
Energy companies can sometimes seem too big to fail. However, due to the current energy crisis, more and more companies have gone out of business in recent months, with the recent gas price hike responsible for sealing the fate of many energy suppliers.
Just at the end of 2021, Entice Energy (which had 5,400 customers) and Orbit Energy (65,000 customers) went out of business due to wholesale gas prices increasing. They were unable to adhere to price promises they had made to customers, so they were forced to close their doors for good.
In fact, 25 small energy companies in the UK have failed in the last few months. Ofgem, the UK’s gas and electricity regulator, has had to find new suppliers for around 2.8 million households since the start of January 2021
Bulb Energy, which has 1.7 million customers, is the largest company so far to find themselves in dire straits due to soaring gas prices. They were placed in special administration last November and were only allowed to continue trading after being handed a £1.7 billion loan from public funds.
Read on to discover why so many energy companies are failing, and what you should do if it happens to you.
Why have energy prices risen so much?
The unprecedented rise in gas prices, which has hamstrung many UK energy providers, can be attributed to several different factors.
Firstly, Europe experienced a cold winter in 2021/22. Even parts of traditionally warmer countries, like Italy and France, experienced temperatures as much as two degrees Celsius lower than normal. This massively increased gas usage in Europe and emptied already strained gas reserves.
The looming conflict in Ukraine and increased Russian aggression in the region has had a serious effect on gas prices too. Russia provides 40% of all European natural gas supply, and there are fears they could turn off the taps in response to NATO interference.
Germany is especially dependent on Russian gas and oil. While the US has been trying to wean them from Russian energy influence, they have been unable to stop the completion of the Nord Stream 2 pipeline.
Russia’s state-backed gas company, Gazprom, even plunged 6.7% on the stock market in January 2022 due to speculation over further economic sanctions imposed on the country.
Gas is also one of the cleanest burning hydrocarbons as it only produces around half of the carbon dioxide that coal does to generate the same amount of electricity.
This has resulted in many coal-fired power plants being converted into gas-fired ones, further increasing the demand for natural gas.
What should you do if your energy supplier fails?
In the unfortunate scenario that your energy supplier is liquidated, it is important to keep in mind that you should continue to receive gas and electricity, even if you spend time without a supplier.
As soon as you discover that your supplier has failed, you should:
- Take meter readings
- Download any previous bills
- Check the balance on your account.
You should do this even before your new supplier contacts you.
Ofgem will then assign you a new supplier. This may take a few weeks so you should remain patient, and eventually a new supplier will get in touch. If you don’t hear from them within two weeks, however, then you should contact them.
After your new supplier has contacted you, they will put you on a new tariff. They may not automatically put you on their cheapest tariff, so it can be beneficial to ask them to do so.
If you have any credit remaining with your old supplier then your money is protected, and your new supplier will inform you how this credit will be applied.
This may not apply, however, if you are a small business customer. Here, Ofgem should assign you a new supplier that will refund some, if not all, of your credit, but this isn’t guaranteed.
Even though your money is protected, it’s important to note that your bills may be disrupted to begin with. As the switch happens, you may receive a larger bill from your new supplier as you may have gone several months without paying for your gas and electricity.
In this case, you should account for a larger than normal payment until your normal monthly payment recommences.
Of course, once you have been assigned a new supplier, you are free to move to another if you aren’t happy with the switch. However, it is important to note that you should wait until you have been set up with a new supplier before changing again.
Get in touch
If you would like to discuss the different ways to manage your wealth during the current “cost of living” crisis, please email us at firstname.lastname@example.org or call 01277 350560. We’d be very happy to help.