What happens if your energy supplier goes bust?
Avro Energy and Green are two of the latest providers to announce that they are ceasing trading
Growing numbers of energy providers are closing their doors for good during the current energy crisis, leaving customers wondering which way to turn.
Avro Energy and Green are two of the latest providers to announce that they are ceasing trading, affecting around 850,000 customers. Justina Miltienyte, energy policy expert at Uswitch.com said: “Avro and Green’s simultaneous exits from the market come after People’s Energy and Utility Point ceased trading last week. Nine energy suppliers have been forced out this year so far and it’s likely that more may follow.
“Soaring wholesale prices are making conditions difficult for all suppliers, but challenger brands in particular are struggling to make ends meet.”
Here’s what you need to know if your energy supplier goes bust.
Why are so many energy providers pulling out of the market?
Wholesale gas prices have increased by a massive 250% since the start of this year. This has placed a huge strain on energy providers who are unable to pass on steeper costs to their customers due to the energy price cap, which limits the amount they’re able to charge. As a result, providers are having to take a financial hit, and many are simply unable to continue trading.
What happens if ?my energy supplier goes bust
If you’re notified by your energy supplier that they are stopping trading, this doesn’t mean your energy supply will be cut off. Ofgem, the energy regulator, will appoint you a new supplier, but it may take a few days until you’re notified which one it will be.
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Your old tariff will end, and you’ll be put on a new tariff with your new supplier, which may be their standard variable tariff. Make sure you wait until your new supplier has contacted you before you look to switch to another supplier and take a meter reading for when your new supplier contacts you.
Aren’t standard variable tariffs the most expensive tariffs?
They used to be, but in these unprecedented times, these are now sometimes the cheapest deals that providers offer, as they can’t exceed the price cap. The cap doesn’t apply to fixed tariffs, so these have become increasingly expensive.
Once you know which tariff you’re being moved onto, check with your provider whether it’s the cheapest deal they can put you on. Even if it is, it’s still a good idea to shop around and check whether you can find a cheaper deal elsewhere. Bear in mind, however, that most providers have pulled their competitive deals from the market, and have withdrawn temporarily from price comparison sites, so you may struggle to find a deal which is much lower than the current price cap.
What if I have a credit balance with my supplier?
Don’t panic – you won’t lose any credit balance you have. This will simply be transferred across to your new provider. Neil Lawrence, director of retail at Ofgem, said: “We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.
“I want to reassure customers of Avro Energy and Green Supplier Limited that they do not need to worry. Under our safety net we’ll make sure your energy supplies continue. If you have credit on your Avro Energy or Green Supplier Limited account this is protected and you will not lose the money that is owed to you."
When will there be a wider range of energy deals available?
Unfortunately that’s impossible to predict at the moment. A spokesman for Energyhelpline.com said: “The industry is so erratic at the moment that the deals could return and then go again. It’s definitely not easy for consumers, especially those who have tariffs ending and are looking to secure a fixed price that’s cheaper than the default tariffs.”