What to do if my energy supplier has gone bust

The UK domestic energy market has been in turmoil with energy suppliers are going bust on the back of soaring wholesale gas and electricity prices whilst their energy regulator - Ofgem, prevents them from passing on these rises to consumers through their 'Energy Price Cap' which came in to effect back in 2019. Since then, whilst Ofgem worked to drive competition in the market by removing barriers to entry, we have seen more than 30 supplies go bust impacting thousands of customers at a time. As this is now expected to become more frequent whilst Ofgem offers no help to support these struggling energy suppliers, it's important to educate yourself on what to do if your energy supplier does go under.

If this does happen to your energy supplier, and right now most of the UK domestic energy market is at risk, there is a process in place to ensure your energy supply is not disrupted and you're able to continue cooking, heating your home, and using hot water. That process is called the "Supplier of Last Result" (also known as SoLR - pronounced "So-lar"). This mechanism, operated by Ofgem, ensures that consumers supply of gas and electricity is maintained, that their credit balances are repaid and that the customer is switched to a new energy supplier as soon as possible.

What happens if my energy supplier goes under?

Ofgem, the Office of Gas and Electricity Markets, is an independent regulatory authority, ensuring that energy is made available to consumers at the lowest possible cost and that consumers are treated fairly by suppliers - including protecting vulnerable individuals. Although they work with the government, they are not part of the government, which means any advice that's given, is purely in the interests of the consumer (so they say!).

Ofgem is also there to ensure your energy supply isn't interrupted if your supplier goes under. They do this by choosing a new supplier for you as an interim solution. Usually your existing tariff won't continue and you'll begin to pay the new tariff specified by the Ofgem chosen supplier. Depending on the supplier you're allocated, they may honour your previous tariff but in the current market this is highly unlikely and you are most likely to be assigned a "deemed contract".

This is likely to be at the same level of the energy suppliers "Standard Variable" tariff. Historically, and until this current fiasco, these tariffs were notoriously the most expensive on the market and it was an Ofgem view that here is where energy suppliers were "profiteering" on the most vulnerable. Well, the tide has certainly turned on that. Now, these tariffs are +£300 cheaper (yes! CHEAPER!) than anything else on the market. Add to that, these tariffs, under the 'Energy Price Cap' are essentially 6-month "fixed" tariffs as they can only be changed twice a year - on the 1st April and again on the 1st October.

Key tips:

• Do NOT panic. Ofgem will handle the process.
• Do NOT switch to another supplier until you know who your new supplier is.
• Take a copy of your current balance and save it somewhere safe to show if your account is in credit. Do this even if your supplier hasn't yet gone bust. You never know.
• Cancel any existing direct debits to the current supplier if you wish to but this is not essential as Ofgem will ensure any credit is repaid.

So my power won't be cut off?

No. Ofgem will be aware of your energy company going out of business, so will move you to a new supplier as soon as possible, but within that time period, your power won't be cut off. You should take a meter reading as soon as possible, once you're aware your energy supplier will no longer be trading, and also ensure you capture a view as to the balance on your energy account i.e. are you in credit or debt and by how much NOTE: This is vital right now as suppliers going bust are shutting down websites and apps so ensure you do this NOW before anything happens and may be problematic further down the line. This arms you with the right information, if requested from your new supplier.

In most circumstances, it will only take a few days for a new supplier to be appointed, but you need to ensure you wait until this has happened, instead of trying to find a new supplier yourself. If you're unhappy with the new supplier's tariff, once the switch has taken place, you're free to switch energy supplier to one who is more competitively priced or who you prefer to be with. There isn't much choice out there right now and, as we say, "Standard Variable" tariffs are the best option right now at the time of writing.

Don't worry if you have a smart meter either - although your new supplier may not be able to use the smart meter you were provided with, they will still take regular meter readings to ensure your energy usage is being measured accurately. Once you're settled in with your new supplier, or you choose to switch to another one, your smart meter will work again in the future.

If you're on a prepayment meter, any credit you have already for your energy supply will be protected by Ofgem and can transfer with you to the new supplier. Your new supplier will then provide you with the details on how to add more credit to your meter, if necessary.

What about cancelling my direct debits?

You don't need to worry about this - simply leave everything to Ofgem, that's what they're there for. If you have any outstanding credit or debt, this will be sorted through the new supplier that Ofgem allocates to you.

If you do have credit, this will transfer to your new supplier and you'll be paid back what you're owed. If you owe money, again, this will come with you to your new supplier and a payment plan can be discussed in order to reduce this debt. However, some suppliers may not arrange to take on your previous supplier's debt, which means you may still have to pay this back to your old supplier. If this situation occurs, everything will be explained to you by your new supplier.

If you've already cancelled your direct debits, fear not. Your newly appointed Ofgem supplier will contact you directly and get you set up on their accounts system, so you don't have a break in your energy supply.