Oh no! Your energy company has gone bust!
Don’t panic. We’re here to talk you through everything that happens when your energy supplier goes out of business, and what you need to do next.
What happens when an energy company goes bust?
When an energy company goes out of business, the industry regulator, Ofgem, swoops right in to pick up the pieces. They find another energy company capable of handling a lot of new customers, known as a supplier of last resort (SoLR), and they automatically switch you over. The new supplier should be a lot more reliable and is very unlikely to go bust, since they have to prove to Ofgem that they can handle you.
Given the frequency with which energy companies have been going out of business in the last few years, Ofgem have got very good at this process.
What should I do if my energy supplier goes bust?
First off, don’t panic. Your gas and electricity supply is not about to be cut off. In fact, a lot of people won’t even know their energy supplier has gone bust until they’re contacted to be told that they’ve been switched to another company. Generally, this happens within a few days of the energy company announcing that they’ve ceased trading.
Your new supplier will need a meter reading, so it’s a good time to take one. If you have a first-generation smart meter, you may find that the smart-capabilities are incompatible with switching suppliers, meaning it effectively becomes a standard meter. This is one of the big problems with the first-generation smart meters, because you’ll have to switch back to providing manual readings. It’s annoying, but it still works.
Don’t cancel any direct debits you had going to your previous supplier. Most times they should be able to transfer this over to the new supplier without you having to do anything, and cancelling the payments will only complicate matters.
Once you’ve been moved to the new energy supplier, the next thing you’ll want to do is switch you energy tariff.
Which energy tariff will I be put on?
When you’re moved to the new supplier, you’ll be put on what they call a ‘deemed tariff’. Theoretically, this aims to have similar rates as your previous tariff from the energy supplier that went bust. In reality, the new energy suppliers tend to make it more expensive so that they can recoup the expense of taking on new customers without any notice.
We recommend running a comparison site search as soon as possible, and switching to the best rate tariff. There will be no exit fees, so you can switch right away.
What if I have credit on my account?
Any credit on the account you held with your previous supplier will be safe. It may take a little time to get back to you, but the new supplier is required to honour it.
If I had debt on my account, will it be dropped?
It’s possible. It depends on the agreement that your new supplier has made.
If they’ve taken on your debt from the previous supplier, they should be in contact to organise a repayment plan.
What if I have a prepayment meter?
If you have a prepayment meter that uses a key or card, you should be able to continue using the one you’ve got until your new energy company sends you a replacement. Once that replacement comes, do start using it, as it’s how the energy company tracks your energy usage. Without that information, you may find that they get in contact for the information instead.
Don’t forget that prepayment meters have tariffs too, so just like with any other tariff we recommend running a comparison to make sure that you’re getting the best deal.
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