What to do if your business energy supplier goes bust or ceases trading

If your business has been affected by a supplier going bust or ceasing trading, give Bionic a call on 0800 860 6833

If your business energy supplier goes bust or stops trading, you might be worried that your energy supply might be disrupted or even cut off. But that should never be the case. 

Ofgem, the UK energy regulator, has systems in place to make sure your premises doesn't go without power and that your business is switched to a new supplier as soon as possible. Here's all you need to know.

What happens if your energy supplier goes bust or stops trading?

If your energy supplier goes bust or ceases trading, the Ofgem safety net will ensure that your business is switched to a new supplier as soon as possible and that your premises won't experience any disruption to its electricity and gas supply.

Here's what the energy regulator suggests you do if your business energy provider stops trading:

• Take a meter reading - To help make sure your final bill is accurate, it's worth taking a meter reading, if possible. You can also cancel any Direct Debits, if necessary, although it might be worth waiting until you've signed up to a new deal before cancelling. 
• Wait for a new supplier to be appointed - The Ofgem safety net means a new supplier will automatically be appointed and there'll be no disruption to your supply. Your new supplier should be announced within 72 hours of your supplier going bust and then appointed within 14 days. 
• Arrange a new business energy contract - When your new supplier gets in touch, you'll need to negotiate a new energy contract, so don't just sign up for the first deal that's offered to you. This could be a good time to shop around and switch, as you won't be charged any exit fees at this point. Speak to the team at Bionic to see if they can get better rates for your business.

Although Ofgem advises business owners to do nothing until it has appointed a new supplier - known as a Supplier of Last Resort (SoLR) - if you had a switch in progress when your supplier went bust, you should still be moved to your new supplier as arranged.  

If you've switched with Bionic and your old supplier has gone bust before your new contract has started, give our team a call on 0800 156 0899.

How long will it take to be switched to a new business energy supplier?

When your business energy supplier goes bust, a new supplier should be appointed by Ofgem within 14 days.

In order to try and make sure your business is switched to as competitive a deal as possible, the regulator puts all of the old supplier's contracts into a bidding process. Once this is complete, it will choose the supplier it feels best suits the needs of these customers.

If you have a smart meter and your new supplier isn't compatible, this meter will still work but without the smart functionality. This means it will operate as a regular meter and you'll need to provide manual meter readings.  

Ofgem will announce the details of your new supplier on its website and social media channels, and your new supplier will be in touch to arrange a new contract. But remember, you don't have to sign up for an energy contract with your SoLR, and so it might be worth shopping around to see if you can get a better deal elsewhere.

If you're in this position, give Bionic a call on 0800 156 0899.  

What happens with your energy contract when your supplier ceases trading?

If your energy supplier goes bust or ceases trading, your contract with them will end automatically.

When Ofgem appoints your new supplier, it will usually place you on a deemed contract or one of its variable rate deals. This means you'll most likely pay higher rates than on your previous fixed deal and will be more vulnerable to future energy price rises. 

The rates are higher on these deals because there is more risk to the supplier. This is because your new supplier doesn't know you as a customer, meaning it can't be certain of how you manage your monthly payments. Another reason rates could be higher is that this new supplier might also have to buy extra wholesale energy at short notice for new customers. If this is the case, it's likely these extra charges will be passed onto customers.

What if you're in debt with your old energy supplier?

If you're in debt with your old energy supplier, you'll still need to repay this debt. 

If you're in debt and looking to switch away from the Ofgem-appointed SoLR, being in debt could mean your switch is blocked until the debt is repaid. 

If your new supplier takes on the debt, they'll be in touch to work out a repayment plan.  

If an administrator takes on the debt, they will collect payments on behalf of your old supplier. This means you may be billed by the administrator instead of your old supplier.

In either case, you should negotiate a manageable repayment plan, especially if you're struggling with the cost of your business energy bills.   

What if you're in credit with your old energy supplier?

If you were in credit with your old energy supplier, Ofgem will try to find a supplier that is able to refund some or all of the money to you. But, unlike when a domestic energy supplier goes bust, this isn't guaranteed by the Ofgem safety net.

You'll need to wait for your new supplier to get in touch and let you know what the situation is. If they can't refund your credit then you'll need to get in touch with your old supplier's administrator. You should be able to find details of who the administrator is on your old supplier's website.

When you get in touch with the administrator, you'll have to register your business as a creditor (this is just the technical term for someone that is owed money) and prove that your account was in credit. You can do this using old bills and statements, which you might have as paper copies, in your emails, or you may need to log into your online account to get them.

This process can take a long time, possibly longer than a year, and the amount you get back will depend upon how much your old supplier owes to all of its creditors. This means you might not get back all the money you're owed.

What can you do while you wait for your new supplier? 

There are a few proactive steps you can take while you wait for your new supplier to contact you. 

If you have an online account, it’s a good idea to log in and check your balance and download any bills to survey yourself. Before your new supplier contacts you, you should also: 

• take meter readings, try to take a photo of your meter readings as well. 
• keep any old bills you have as these can be used to prove payment history, credit balance or debt. 
• make a note of your account balance, this is easy to find, you’ll find it on your most recent statement. 

To help avoid running into payment issues, it's worth waiting until your new account is set up before cancelling your Direct Debit.  

What if you have an unresolved complaint against your old supplier? 

If you made a complaint to your old supplier that hasn't been dealt with, you should raise it again with your new supplier. This includes complaints about billing and your account balance.

But your new supplier isn't obliged to take any unresolved complaints further. If your complaint had been escalated to the Ombudsman, they will get in touch with you to discuss what happens next.    

What energy suppliers have ceased trading in 2022?

26 energy suppliers have ceased trading or gone bust since January 2021.

*Ofgem said in a statement regarding Bulb: "We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members. If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”

What's the difference between a business going bust and ceasing to trade?

When a business goes into liquidation - or 'goes bust' - it closes down completely, is removed from the register at Companies House and has any assets sold off to repay creditors. When a company ceases trading, it can still be registered as a limited company even though its business activities have ended. 

Has Bulb gone bust?

Bulb found itself in trouble when rising wholesale energy costs meant it could no longer supply energy to customers at the rates it had previously agreed. But because Bulb was such a big supplier - providing power to around 1.5 million homes and businesses - it was placed into 'special administration' instead of going through the 'supplier of last resort' process. 

This effectively nationalised Bulb (meaning the government covers its running costs) so it could carry on trading as normal until it could be fully or partially sold. A buyer was eventually found in late 2022 when Octopus Energy announced it would be buying Bulb and taking on its customers.

Has Bulb been taken over by Octopus?

Octopus Energy has announced that it is going to buy Bulb. This means Octopus will take on all of Bulb's existing customers, including its 12,000 or so non-domestic contracts. But if you had a contract with Bulb, this will be cancelled and you'll be placed on Octopus Flex. This is a variable rate tariff that will leave you more vulnerable to future price rises and may also impact the amount of discount you can get under the government's Energy Bill Relief Scheme.     

The good news is that you switch to a fixed-rate deal at any time and won't need to pay any penalty fees. If you're in this position, give the tech-enabled experts at Bionic a call today on 0808 253 6897 or pop your postcode in the box on the right and we'll call you back.  

Why are energy suppliers going bust or ceasing to trade? 

A staggering 65 energy suppliers have gone bust or ceased trading since 2016, affecting thousands of homes and businesses across the UK.  

There are several factors that lead to suppliers no longer being able to trade, including:

• Rising wholesale costs - Wholesale energy costs are the prices suppliers pay to buy the gas and electricity they sell to you. Some suppliers set their rates low to entice new customers, but then come unstuck when wholesale prices suddenly soar and they lose money on those low-rate fixed-energy contracts.
• Government levies - The government has charges in place to support vulnerable customers and encourage the use of renewable energy sources, such as the Renewables Obligation (RO). If suppliers can't afford to pay these levies, they're fined. This can be enough to put some suppliers out of business. Spark Energy, for instance, went bust days after it missed a deadline to make a £14.4 million RO payment.

But why have wholesale costs risen to such levels that suppliers can't offer rates at previous levels and eventually go under? Again, there are a number of reasons, including:

• Gas shortages across Europe
• High demand for liquefied natural gas (LNG) from Asia   
• Delays and complications to the Nord Stream 2 pipelines
• Low winds have meant less renewable energy generation
• A fire causing damage to an electricity interconnector between the UK and France
• The conflict in Ukraine and the closing down of the Nord Stream 1 pipeline

To find out more, check out What is going on with energy prices in the UK?