As the market attracts more and more new energy suppliers, there is a risk that some of them will inevitably fail. What happens if your energy supplier goes out of business?
What happens if your energy supplier goes bust?
The most important thing to know is that if an energy supplier goes out of business, its customers will not have their gas and electricity supply cut off. The energy that comes into your home is not directly supplied by that company, so your lights and heating will stay on.
Should I avoid small energy providers?
Not at all: it is perfectly safe to choose a smaller supplier if they can get you a better deal because even if they become bankrupt, your energy supply will not be affected and the energy regulator will take care of everything on your behalf.
Am I safe?
Totally. The energy regulator, OFGEM will automatically switch you to a new supplier so you will not notice any disruption. Your gas and electricity continue to work, you won’t be cut off, and you don’t need to go out and find a new energy supplier straight away.
What do I do if my energy supplier goes bust?
You don’t need to do anything, but when you hear on the news that your energy supplier is no longer in business, it would be a good idea to take some meter readings just in case there is any confusion with your new suppler.
How does OFGEM Pick a new supplier?
They invite other suppliers to bid for the custom of the bankrupt supplier and select the best deal for those customers from the bids they receive.
What if I have a credit balance?
Your credit balance will be protected and honoured by the new supplier as a condition of their bid to OFGEM. This means that you will not lose out financially as a result of your old supplier ceasing trading. Once the dust has settled, you will be back in the same position as you were before the supplier went into administration.
What if I owe my supplier money?
This will depend on the deal that is done between your new suppliers and your old supplier’s administrators. Generally, you can expect to pay back anything you owed your old supplier to your new one – but only if the new company agrees to take on the debts of the old one. Your new supplier will inform you at the time.
What if I am moving home?
If you are moving home then it is a good idea to set up a mail redirect with the Royal Mail as the new supplier will contact you at your old address.
Do I cancel my Direct Debit?
It is up to you: you are free to contact your bank to do so, as the new supplier can set up a new agreement, or they may take over the existing direct debit from your old supplier. The Direct Debit Guarantee protects you if a payment is taken in error – but if you do decide to cancel it, your new supplier will be in touch before long to create a new one.
Will I be tied into a fixed term with the new supplier?
As soon as you have been switched to the new supplier you will be free to exercise your right to leave without penalty. This will apply even if you were on a fixed-length deal with the old company. It is not your fault that you are with a different company, and so there is no detriment to you. You are free to move and secure the best deal on the market.
Has it ever happened?
Recently Spark Energy went bust. Their customers were automatically switched onto OVO energy, except for those customers who used the Switchd service – they were switched to the cheapest deal on the market without having to lift a finger!
How can Switchd make switching supplier easier?
Switchd is a service that ensures you are always on the best energy deal. We constantly keep track of energy prices and use sophisticated technology to make sure our customers are always on the best tariff. You don’t have to worry about which supplier you are with, how much energy you use or understand fixed rates, variable rates and standing charges: you just leave it all to us, and we monitor the market, and as soon as you can save, we switch your supplier on your behalf.
Switchd can also protect you further if your supplier goes bust. It ensures that you are switched onto the cheapest tariff – therefore protecting you in case the tariff OFGEM switches to you is expensive! Basically – it sorts the hassle out for you!
Switch and Save on your Energy
If you haven’t switched energy supplier in the last 12 months, you will probably be paying too much. Switching is simple, so why wait? Use Switchd, and you can sit back in the confidence that our sophisticated algorithm is working hard behind the scenes, making sure you are paying the lowest possible amount for your energy.
Further reading: https://www.ofgem.gov.uk/consumers/household-gas-and-electricity-guide/extra-help-energy-services/ofgem-safety-net-if-your-energy-supplier-goes-out-business