What to do if your business energy supplier goes bust
If your business energy supplier goes bust, 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?
If your energy supplier goes bust, 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 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 goes bust?
If your energy supplier goes bust, your contract with them will end automatically.
When Ofgem appoints your new supplier, it will place you on a deemed contract. This means you'll most likely be on higher rates than you had on your previous deal.
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 I do while I wait for my 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 gone bust in the last 12 months?
12 energy suppliers have gone bust in 2021.
|Supplier||When did it go bust?||What happened next?||Number of customers|
|Green Network Energy||January 2021||EDF appointed SoLR||360,000 domestic and an undisclosed number of non-domestic customers|
|Simplicity Energy||January 2021||British Gas appointed SoLR||50,000 domestic customers|
|HUB Energy||August 2021||E.ON appointed SoLR||6,000 domestic and 9,000 non-domestic customers|
|PFP Energy||August 2021||British Gas appointed SoLR||82,000 domestic and 5,600 non-domestic customers|
|MoneyPlus Energy||August 2021||E.ON appointed SoLR||9,000 domestic customers|
|Utility Point||September 2021||EDF appointed SoLR||220,000 domestic customers|
|People's Energy||September 2021||British Gas appointed SoLR||350,000 domestic and 1,000 non-domestic customers|
|Avro Energy||September 2021||Octopus Energy appointed SoLR||580,000 domestic customers|
|Green Supplier Ltd.||September 2021||Shell Energy appointed SoLR||255,000 domestic and an undisclosed number of non-domestic customers|
|Enstroga||September 2021||Awaiting SoLR from Ofgem||6,000 domestic customers|
|Igloo Energy||September 2021||Awaiting SoLR from Ofgem||179,000 domestic customers|
|Symbio Energy||September 2021||Awaiting SoLR from Ofgem||48,000 domestic and an undisclosed number of non-domestic customers|
Why do energy suppliers go bust?
A staggering 51 energy suppliers have gone bust since 2016, affecting thousands of homes and businesses across the UK.
There are several reasons why suppliers go bust, 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 so many energy suppliers are gone under recently? 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
To find out more, check out What is going on with energy prices in the UK?