Why are energy suppliers going bust?
An unprecedented rise in wholesale fuel costs means many companies have promised energy to customers for less money than it now costs.
But between fixed tariffs and the fuel price cap, they cannot pass the cost onto customers, meaning they’re losing cash fast and the industry has fallen into an energy crisis.
But Ofgem is set to increase the price cap by 12 per cent on October 1, potentially raising costs by £280 a year for 15 million UK households.
What happens if my energy supplier goes bust?
If your fuel company folds during the energy crisis, you won’t be left without heating and electricity. Ofgem will step in and transfer you to a new supplier within a few days.
The energy regulator asks existing companies to bid on the customers left behind when a firm has folded in a process designed to get the best deals for customers.
You can cancel your direct debit if you want to, but you don’t need to do so immediately. Citizens Advice suggests you wait until your new arrangement is in place.
Ofgem recommends you take a meter reading as soon as possible after your company stops trading.
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Your new supplier will contact you and you should ask for the cheapest tariff. There is no guarantee you will be paying the same amount as you were with your old company. You may be offered a higher tariff to begin with because you will be placed on a “deemed” contract. This means it is a contract you didn’t choose and absorbs some of the risk a company takes on, such as having to buy a lot more wholesale energy at short notice to meet the demand from new customers.
If you’re unhappy with your new supplier or new conditions, you are free to shop around and won’t be charged exit fees.
Any money your original supplier owed you is protected and will be given back to you. But if you are in debt to the company, you will still be required to pay it.
What if I have a smart meter?
Ofgem says it will try to source a company that can operate your smart meter.
But if it can’t, the meter will still work like a traditional meter and the supplier will take readings manually.
What should I do if I can’t pay my energy bills?
Energy prices are rising even for those whose suppliers are still trading and switching company isn’t an option for many.
You should first contact your supplier to negotiate a payment arrangement which works for both of you, allowing you to pay what you owe in a way that you can afford.
The firm should take into account how much you can afford to pay and how much energy you’ll use in future. Citizens Advice offers a budgeting tool to help you calculate how much you can pay based on your circumstances.
The company could threaten to disconnect your energy supply if you don’t contact them to discuss ways to pay.
If you don’t reach an agreement, or can’t make agreed payments on your new plan, the company might install a prepayment meter instead.
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If you receive income support, income-based jobseekers’ allowance, employment and support allowance, pension credit or universal credit (while unemployed) you could repay your debt through your benefits.
You can set up payments using the fuel direct scheme by contacting the jobcentre.
You can also ask your supplier about the grants and schemes they offer to people struggling to pay. Other funds might be available to you if you receive benefits, are disabled or are elderly.
What should I do if I can’t top up my prepayment meter?
Your company might give you temporary credit automatically when you run out. If they don’t, contact them to request it.
You’ll repay this later each time you pay into your meter, meaning you’ll pay more than the amount of energy you will receive.
The company can adjust the amount you are paying on each top-up if it’s unaffordable.