Energy Supplier Gone Bust? Know Your Rights & Options

When an energy supplier goes out of business, it can feel stressful. But there is something in place to help you. In the past few years, several UK energy firms have shut down. Rebel Energy, Bulb Energy, and Tomato Energy are some of them. This happened because of high wholesale prices, poor management, or the bigger energy market crisis.

The good thing is that Ofgem’s safety net helps you with your energy supply and credit balance. You will not lose your gas or electricity, even if your old supplier stops working without warning.

In this guide, you will see what steps to take, how to keep your account safe, and how to compare energy prices once you get moved to a new supplier.

What Happens If My Energy Supplier Goes Bust?

If your energy supplier closes down, Ofgem will pick a supplier of last resort to handle your account. This will happen by itself. You do not need to do anything right now.

Your energy supply will stay the same. There will be no blackouts and no disconnection. You will be put on a deemed contract for now. This is a special emergency rate that the new supplier will give you.

While this deal may not be the lowest in price, it is made to make sure you have coverage while you move.

Key First Steps

• Take a photo of your meter readings for both gas and electric.
• Save a note of your account balance and keep your old bills handy.
• Download anything you can from your online account.
• Cancel or pause your direct debit, but do not ask for a refund yet.

These steps help keep your credit balance safe. They also make it easy to get a refund later.

How Does Ofgem’s Supplier of Last Resort Process Work?

The Supplier of Last Resort process is an important part of the UK’s energy regulator system. This is how this process works:

This process keeps more than 29 million energy customers in the UK safe. It helps people, especially in tough times like when global gas prices went up in 2022 and 2023. This is to make sure everyone is protected during exceptional circumstances, such as changes in global gas prices.

Will I Lose My Credit Balance?

No, your credit balance will be safe. When the new supplier starts, they will check the old supplier’s records. They will add any credit you still have to your new account.

However, this process can take a long time. In some cases, it might be several weeks. It depends on how the failed supplier kept their records.

To speed things up:

• Make sure to keep the final meter readings.
• Download your old bills or take screenshots of them.
• Keep a record of talks you have with your old and new supplier contacts.

What About Prepayment Meter Customers?

If you use a prepayment meter, you should be able to still top up your meter with your key or card. Ofgem will make sure you can keep topping up while things change over. If you have any problems, get in touch with your new supplier or Citizens Advice.

The energy regulator makes sure that emergency credit and help for people who need more support will go on during the whole process.

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How Do I Know Who My New Supplier Is?

You will get a direct call or message from your new supplier, like Octopus Energy, E.ON Next, or another company, in just a few days. This message will have some details about what to expect next.

• Your deemed contract tariff
• What happens to your credit balance
• Your rights with the Ofgem safety net
• How you can start your new online account

You do not have to stay on the deemed tariff for a long time. You can compare energy prices and switch to a new plan once the change is done.

What Should I Do With My Direct Debit?

If your direct debit is still active with your old supplier, it is a good idea to stop it for now. You can do this by asking your bank.

Do not ask for a refund right away. Your credit balance will be taken care of with the supplier of last resort process.

Your new supplier will help you start a new payment plan. They may give you choices on how to pay. You can use a card, set up a Direct Debit, or choose prepayment.

Direct Debit Refunds

If you just paid a large amount to your old supplier and they then go into an insolvency process, refunds might be slow. An insolvency practitioner will be the one to handle any refunds.

Keep any emails you get that confirm payment, or any bank statements you have. These can be used as proof if you need them.

What Happens to My Smart Meter?

Your smart meter will keep track of your energy use. But, some features may change and switch to smart mode off. This will happen until your new supplier sets it up again.

You might have to give manual meter readings for some time. This often happens if your smart meter is a first-generation meter (SMETS1) and does not work with all systems. This way, you can make sure your meter readings are right.

The new supplier will tell you if you need to send photos. The new supplier may also let you know if you should submit readings online.

What Is a Deemed Contract?

When you get moved to a new supplier, you start on a deemed contract right away. This means:

• You did not pick the supplier.
• The tariff will not last for a long time.
• You can change suppliers any time, and there will not be an exit fee.

Why Deemed Contracts Are Expensive

These tariffs are often more high than the cheapest tariff you can get. This is because the new supplier takes on more risk. This gets even bigger if there is an energy market crisis. At some times, they also need to buy extra wholesale energy quickly.

That is why you need to compare energy prices. You should wait until your bill is clear and your energy supply is steady before you switch.

What Happens to the Warm Home Discount?

If you could get the Warm Home Discount, your new supplier might still give it to you, but only if:

• They are in the government program.
• You meet the rules to get this.
• You still get your supply by the date you need.

If you have not done this, you may need to apply again. You can talk to your new supplier or the warm home discount helpline to get help.

Can I Switch to Another Supplier After the Bust?

Yes. Once they finish moving your account and you know your credit balance, you can go on and switch supplier after bust. You will be able to choose a new deal at that time.

Use a site like Free Price Compare when you want to:

• Get the best possible deal for your needs.
• Do not get stuck with another deemed contract.
• Lock in a fixed tariff. You will not be hit with any surprises.
• Save money now instead of paying the high standard variable rates.

You need to check if your new supplier has an exit fee before you switch again.

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Why Are So Many Energy Companies Failing?

The last few years have created a perfect storm:

• After 2020, global gas prices went up a lot.
• The energy price cap set a limit on how much companies could ask for energy.
• Smaller suppliers found it hard to get wholesale energy at a good price.
• Some firms did not make plans for price swings or changes in the market.
• Companies like Bulb Energy and Rebel Energy did not have enough backup funds to keep the business going.

Even companies led by people who used to trade energy, like Dan Bates from Rebel Energy, were hit hard. This shows just how bad the situation was.

Ofgem has now made the rules on financial strength stronger. This is to stop more problems from happening in the future.

FAQs About Energy Supplier Collapse