Eight small energy firms have gone bust in 2019 – are they safe to sign up to?
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EIGHT household energy suppliers have gone bust so far in 2019, up from six last year, and compared to only two in the nine years to January 2018.
Yet more and more customers switch to small and medium energy suppliers as they often offer cheaper deals than their bigger rivals.
So far in 2019, Breeze Energy, Toto Energy, Eversmart Energy, Solarplicity, Cardiff Energy Supply, Brilliant Energy, Our Power Energy, and Economy Energy have all gone under.
This year has also seen the failure of one business energy provider too, called Uttily Energy.
In 2018, Future Energy, Iresa, Gen4U, Usio Energy, Extra Energy and Spark Energy all collapsed.
As a result, new rules took force in June this year that makes it harder for new energy suppliers to enter the market.
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But the fact households are switching to smaller suppliers, even if they potentially run a higher risk of going bust, isn't surprising, according to Rik Smith, energy expert at price comparison website uSwitch.
He told The Sun: "There are over 60 suppliers in the market, offering great choice for households to find a good deal and pay less on their energy bills.
"Many challenger brands not only offer cheaper tariffs but also outperform the bigger players in areas like customer service, green energy, and easy account management."
How do I know if my supplier is at risk?
Energy regulator Ofgem told The Sun there isn't any straightforward way for customers to check if their supplier is about to go under, but also stressed that it will ensure supplies are secure and credit balances protected, should the supplier collapse.
In other words, you'll never have to go without energy, even if your supplier goes bust and it is the smallest on the market.
The experiences of other customers can also give you a good idea of how well your energy supplier is doing.
Citizens Advice ranks energy suppliers' customer service by taking a number of factors into account, and you can find the most recent list .
Some customers may also be tempted to check financial results, but those are necessarily not an indicator of whether a supplier may cease trading in the future.
Meanwhile, only public companies are required to publish such results, meaning most of the smaller energy firms don't.
What happens when your energy supplier goes bust?
Ofgem says it's unlikely your supplier will go out of business, but if does, the regulator provides a safety net that will make sure you'll always have an energy supply.
Below is a round-up of some of the most common questions:
Will my supply be cut off?
No. Ofgem will move you to a new supplier, and says your energy supply won't be disrupted.
In fact, you won't notice any change, other than a new supplier being appointed for you.
Who will choose my new supplier?
Ofgem will choose your new supplier, following what it claims is a "competitive process designed to get the best deal for you".
Will my bills go up?
They could do - your new supplier will put you on a special "deemed" contract, which means it's a contract you haven't chosen.
Your bills may go up as those contracts can be more expensive.
How to switch suppliers and save
SWITCHING suppliers is the best way you can cut your energy bills. Here's what you need to do.
1. Shop around - If you're on an expensive Standard Variable Tariff (SVT) deal you are throwing away up to £300 a year. Use a comparison site like MoneySuperMarket.com or EnergyHelpline.com to see what best deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information to hand - which you can find on your bill - to give the new supplier:
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
For more advice read our guide on how to switch.
I'm in credit to my old supplier, will I get this money back?
Your new supplier will pay back the outstanding credit you may have.
Once Ofgem has appointed the new supplier, it will contact you to explain how this will work.
What if I'm in debt to my old supplier?
If you're in debt to your old supplier, what happens to repayments depends on the agreement reached.
The debt could be wiped, but equally the new supplier could take on the debts and require payments, or the administrator of the old firm may take over the debt collection.
I had made a complaint to my old supplier and I'm still waiting for it to be resolved. What happens now?
If you had made a complaint to your old supplier and it had not yet been resolved, you will need to raise the issue again with the new supplier once Ofgem has chosen them.
The new supplier will review if the complaint is still relevant now that you have transferred to them, or if it can be closed.
Can I switch supplier?
Ofgem advises consumers not to switch immediately, and instead wait until their new supplier has got in touch.
Once you've been contacted, ask it to put you on the cheapest deal or shop around if you aren't happy.
You won't be charged exit fees.
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