Once upon a time the idea of asking ‘What happens if my energy supplier goes bust?’ would’ve seemed laughable. But then, not so long ago, anyone who sat on their sofa telling their television set to switch channel would’ve got some very strange looks indeed.
It’s called progress, and it brings good things and bad things.
The good thing in this case is that we no longer have to take all our gas and electricity from the Big Six suppliers, but can turn to small energy companies. That doesn’t stop nearly 80% of people in the UK sticking with the Big Six, unfortunately, for the same kind of reasons as 54% still put up with being on a standard variable tariff (or, to give it the technical name ‘the most we can possibly get away with charging’). If people are going to resist change, the big energy companies will take advantage.
That 54% figure comes from a report written by the industry watchdog Ofgem, and the same report points out that these people, who’ve stuck with the default tariff for the last three years, could have saved an average of £320 a year if they’d switched to the cheaper tariff of any of the Big Six companies.
That’s right, we’re not even talking about plucky start-ups, offering cut price energy in an effort to disrupt the marketplace, we’re talking about the same companies supplying the same energy down the same wires and pipes. So why don’t more people switch?
There are two answers to that question. The first is just the idea that switching is a lot of effort. Fuss. Hard work. Going through bills that you can’t comprehend anyway, phoning suppliers, calculating tariffs… who needs it? Actually, switching isn’t anything like that, and the only thing you’ll even notice when you get round to doing it is that, all of a sudden, you’re paying less for your gas and electricity.
Which brings us to the other thing stopping people switching…
Is it safe to use a small energy company?
Are small energy companies reliable? We’ve been depending on the Big Six for years, but some of the smaller companies have only been around for 24 months or so. If you’re wondering which energy suppliers have gone bust, then take a look at the list below, which details those energy firms which have gone to the wall since January 2018:
- Future Energy January 2018
- Flow Energy May 2018
- Gen 4U July 2018
- Iresa July 2018
- Affect Energy August 2018
- Electraphase August 2018
- Usio Energy October 2018
- Snowdrop Energy October 2018
- Extra Energy November 2018
- Spark Energy November 2018
- One Select December 2018
- Economy Energy January 2019
- Our Power January 2019
- Brilliant Energy March 2019
- Solarplicity August 2019
- Eversmart Energy September 2019
- TOTO Energy October 2019
Some of these companies had more than 250,000 customers, others less than 500, but taken at face value it looks like a pretty frightening list.
It doesn’t have to be too frightening, however…
That’s because, even if your energy supplier does go bust, you won’t suddenly be plunged into darkness with no hot water. The official watchdog, Ofgem, operates a ‘safety net’ scheme which means that, if your supplier does go bust, you’ll immediately be shifted to another supplier without any disruption to your service. The most you need to do is take a meter reading to ensure that any future charges are correct, or to back up your case if you try getting a refund of credit you’ve built up, but the important thing is you’ll never be left literally in the dark.
How does it work?
Ofgem will ask suppliers to put bids forward, and will then choose the bid which they think represents the best value for the customer. The advantages of staying calm and waiting for this to happen are that there’ll be no issue with maintaining energy supplies and, if your account was in credit at the time your supplier went bust, you’ll be getting a refund on the amount you built up.
If you owed money to your old supplier then what happens to that debt depends on the arrangement the new supplier has come to. If they’ve agreed to take on the debts of the old supplier than you’ll have to pay the debt to them, but if this agreement hasn’t been reached then you won’t owe the new supplier any money. In some circumstances you might have to pay the debt back to your old supplier, or to an administrator.
Do I have to accept the new contract?
The tariff your new supplier puts you on may well be more expensive than that offered by your old supplier. Once the new supplier gets in touch with you, you should ask them to put you on their cheapest tariff, which will be a fixed rate tariff rather than a standard variable tariff. Alternatively, you could look for a new supplier offering a better tariff, and the good news is that you won’t be charged exit fees for leaving the supplier Ofgem shifted you to. Of course, some people will probably stick with that more expensive tariff, but if you’ve read this far then you’ll know you can almost always do better.
If you’re unhappy with the way your situation has been handled at any point then you can make a complaint, first to your new supplier and then, if you’re not happy with their response, to the energy ombudsman eight weeks later.
The simplest summary of the situation is that:
- At no point should your supply be interrupted.
- You are still free to shop around for the best tariff available to you.
If you do decide to switch tariffs again after all this turmoil then take the easy route and come to WeFlip. We find the most affordable tariff for you and do all the switching, leaving you free to concentrate on deciding how to spend the money you’ll save.