What happens if your supplier goes out of business?
If your energy supplier has gone out of business, there’s no need to worry. There are safety nets put in place to protect your supply, and to help you securely and quickly transition to a new supplier, with zero effort on your part.
IMPORTANT: Your energy supply will not be cut off.
When suppliers go bust, affected customers are looked after by Ofgem, the UK’s energy regulator. Ofgem has solid plans in place in the event of a supplier collapsing. These plans have been proven to work well in practice – and things generally run smoothly and easily for the consumer when they are implemented.
Why are we seeing suppliers go bust? What may lead to more suppliers going bust in the future?
There are several reasons, but these are the most prominent:
- The cost of wholesale energy has been rising rapidly, making it hard for some suppliers to compete financially.
- A government price cap has affected standard tariffs, which may have made it harder for suppliers to provide cheap deals.
- Overall market conditions (such as fierce competition and political changes) have made remaining both competitive and profitable increasingly challenging for suppliers both big and small.
The supplier market has accelerated dramatically in recent years. To give you an idea, the total number of suppliers grew by 600% from 2007 to 2017 alone. In December 2004 the UK had 13 suppliers; and as of this writing, there are over 80. That means competition is fierce.
However, this is great news for consumers like you. After all, the more competition there is in the market, the more suppliers are motivated to stand out – by offering low prices, top-tier service, or both. This means there are many great deals out there just waiting to be found.
Do you need to worry about what would happen to you if your supplier went bust?
In short - no. No matter what supplier you choose, your ability to access energy is safe. Your lights and heating will still work, regardless of your supplier’s business concerns.
But for a boost of extra confidence, you can select a supplier with top-rated service, or even a major household name, and still find a great price.
Could my bills go up after I am switched to a new supplier?
Unfortunately, yes. However, you could potentially bring them back down again.
The new supplier you are placed with may not be able to offer you the same rate that the old supplier did.
The old tariff you were on (and any contracts connected to it) will no longer exist should your supplier go bust.
Instead, your new supplier will give you a ‘deemed’ contract – meaning one you haven’t chosen. The bad news is that these contracts can be more expensive. The good news is that you can exit them at any time without penalty.