What happens if my energy company goes bust?

Energy regulator Ofgem has offered consumers some advice if they are affected by their supplier going bust:

• Take a meter reading, sit tight and don’t switch supplier. You can cancel your Direct Debit if you want to. If you already have a switch in progress, it will proceed as usual.
• Wait to hear from Ofgem about your new supplier, who will be appointed for you. You don’t need to do anything. Your supply won’t be disrupted and it should only take a few days. Ofgem’s safety net will protect your supply and any credit balance.
• Be ready for when your new supplier contacts you – ask to be put on their cheapest tariff or shop around and switch if you want to. You won’t be charged exit fees.

The good news is that there are rules in place to protect customers if energy companies collapse. Ofgem has implemented a safety net for consumers, which means you won’t be left without gas or electricity if your utility company goes out of business.

Once a supplier ceases trading, the Ofgem safety net will immediately kick in to ensure you have a continuous energy supply, and as little disruption as possible. You’ll be found a new supplier without you having to do anything.

No, you don’t need to worry about being cut off if your energy supplier goes bust. Under the Ofgem safety net process, you’ll be moved to a new supplier, with no disruption to your supply of electricity or gas.

It’s a good idea to take a meter reading and jot down your balance as soon as you find out your current energy provider has collapsed. You’ll need this when your new supplier gets in touch with you.

Your new energy provider will be chosen by Ofgem on your behalf. This is known as a ‘Supplier of Last Resort’ (SoLR).

Once your new supplier has been chosen, they will contact you with details of your new contract.

Ofgem says that when a supplier fails, its main concern is to make sure customers continue to have gas and electricity.

The regulator looks for a new supplier that can take on new customers quickly without it adversely affecting its existing customers. It must also show it can supply increased volumes of gas and electricity for a fair price.

Suppliers can volunteer to take on this kind of customer to grow their business in size. If no provider volunteers to take the customers of a failed supplier, Ofgem will appoint the supplier they consider best equipped for the job.  That new supplier will then contact you with personalised information about your tariff – at which point you can stick with them or decide to switch supplier or to a different tariff from your new supplier.

Ofgem recommends that customers take a meter reading and make a note of their account balance.

If your new supplier can’t operate your smart meter to in smart mode, it will still continue to work but only as a traditional meter. This means that meter readings will need to be taken manually.

It doesn’t mean your meter can’t work in smart mode again in the future, Ofgem says. For instance, it could work with another supplier if you shop around, or when all meters are enrolled on the smart energy network.

You should still be able to top up your meter as you would normally while we appoint a new supplier for you. You shouldn’t lose supply.

If you are having problems topping up or your card or token won’t work, you can contact Citizens Advice, or Advice Direct Scotland if you are in Scotland.

For Citizens Advice:

• Call 0808 223 1133 or use their online webchat.
• For textphone, dial 18001 followed by the helpline number.

For Advice Direct Scotland:

• Call 0808 800 9060, use their online webchat or contact them by e-mail.
• British Sign Language information.

If you are having problems, you can contact Citizens Advice or Advice Direct Scotland, if you are in Scotland.

For Citizens Advice:

• Call 0808 223 1133 or use their online webchat.
• For textphone, dial 18001 followed by the helpline number.

For Advice Direct Scotland:

• Call 0808 800 9060, use their online webchat or contact them by e-mail.
• British Sign Language information.

If you are having problems topping up or your card or token won’t work while we are appointing a new supplier, you can contact Citizens Advice, or Advice Direct Scotland if you are in Scotland.

For Citizens Advice:

• Call 0808 223 1133 or use their online webchat.
• For textphone, dial 18001 followed by the helpline number.

For Advice Direct Scotland:

• Call 0808 800 9060, use their online webchat or contact them by e-mail.
• British Sign Language information.

Once we have appointed a new supplier, they will be able to advise and help with new and replacement key cards and tokens.

Your new supplier will take into account any outstanding credit you may have. This is money owed to you by your old supplier. They will contact you and let you know how it will work.

In most cases, the credit will be added to your new account, with a deduction for energy costs you haven’t yet been billed for.

Any money you still owe to your old supplier (your account debit) will most likely be transferred to your new account. But if your SoLR hasn’t arranged for this, you’ll still be in debt to your old supplier or their administrator.

Either way, you’ll still need to pay back what you owe. The new supplier should explain how you’ll need to pay be what’s still outstanding.

No, you won’t be on the same tariff as before. You’ll be put on a new contract. This is known as a ‘deemed contract’, which means you didn’t choose it.

Deemed contracts can be more expensive, so you may find it’s better to shop around and find a better energy tariff elsewhere. Ofgem recommends that you only do this once you’ve successfully moved over to your deemed contract, so as not to confuse the process.

They could well do. That’s partly because you may have been on a cheaper deal that other suppliers can’t match.

Also, deemed contracts can cost more because the supplier takes on more risk. For example, they might have to buy extra wholesale energy at short notice for new customers.

So be prepared for some differences between your old and new tariff. Ofgem does say it’s committed to getting the best possible deal for you, though.

You can switch if you’re not satisfied with your new SoLR energy supplier. In fact, this would be the perfect time to shop around for a cheaper tariff.

Ofgem says you should wait until you’ve successfully moved over to the appointed supplier before starting the switch process to any alternative supplier. This usually only takes a few days.

If you decide to switch energy suppliers after the SoLR process is complete, you won’t be charged an exit fee, so you won’t be locked into a contract you didn’t choose.

And thanks to the government-backed Energy Switch Guarantee, the whole switching process is simple and quick.

The current guidance is if your energy company has not gone bust, not to change suppliers until the current price increase has calmed down. There are several online comparison tools, to help you compare tariffs and choose one that suits you.

Not all deals and suppliers are available via price comparisons, so it is worth checking with some suppliers directly as well.

You can compare energy suppliers at:

• Ofgem  has a list of approved price comparison websites.
• Compare the Market
• Money Supermarket

• Take a look at Ofgem website for even more of your questions answered.
• We also have more information of heating your own home and the warm home discount.