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Which energy suppliers have gone bust?
It’s concerning to hear that your energy supplier is going bust. But fear not; Ofgem guarantees that no home or business will be cut off even if your supplier is insolvent.
We’ll explain what happens when an energy supplier goes bankrupt and recommend actions to avoid paying too much on your home or business energy bills.
Contents:
- What happens when an energy supplier goes bust?
- List of energy suppliers who have gone bust
- Who has replaced my energy supplier?
What happens when an energy supplier goes bust?
When an energy supplier goes bankrupt, the regulator Ofgem ensures that the electricity and gas supply to your property continues uninterrupted.
Here, we’ll outline the steps involved when an energy supplier goes bust. The following applies to Britain’s electricity and gas supplies to businesses and homes.
Energy supplier insolvency event
Energy suppliers go bust when they can no longer pay their debts. This is often triggered by a Statutory Demand made by a bank or other creditor, validated by a court ruling.
Licensed domestic and business energy suppliers will report to Ofgem if they can no longer repay their debts or if a court has ordered insolvency proceedings.
Negotiations of a trade sale
If another energy supplier expresses interest in purchasing the insolvent supplier, Ofgem will allow the supplier to continue to trade while negotiations occur.
Ofgem may appoint an administrator to operate the supplier during trade sale negotiations. The most recent example of this is Octopus’s acquisition of Bulb in December 2022 after a year of Bulb being in administration.
Revocation of licence
If a trade sale is not forthcoming but the supplier remains insolvent, Ofgem will revoke the energy supplier’s licence. Ofgem will publish the reason for the licence revocation on its website.
Ofgem’s publication of the revocation will usually be picked up by journalists and appear in national news, especially for large suppliers.
Appointment of Supplier of Last Resort
The business and domestic customers of the failed supplier will become the responsibility of a Supplier of Last Resort appointed by Ofgem. Upon appointment, all customers of the failed supplier will be transferred to the appointed new supplier.
💡 Usually Supplier of Last Resort Appointments are voluntary, with suppliers looking to increase their customer base.
Customers receive notification of transfer
The Supplier of Last Resort will contact all customers to inform them that their supply has been transferred. The new supplier will honour the account balances of all transferred customers; however, the tariffs agreed with the old supplier will no longer be valid.
Deemed supply contract commences
The transferred customers will start on a deemed contract with variable rates reflecting ‘the reasonable cost of supply’ determined by Ofgem. Variable rates will apply to all customers until they agree on a tariff with their new supplier or switch to an alternative supplier.
💡 Domestic deemed contracts are protected by the energy price cap. There is no business energy price cap.
Customers consider fixed contracts
In both commercial and domestic energy supplies, fixed contracts are typically cheaper than the deemed contracts imposed when a supplier goes bust.
Upon completion of the transfer, customers can compare business energy prices to find another supplier.
A list of energy suppliers who have gone bust
The following table shows a complete list of the 31 energy suppliers that have gone bust since 2021.
Source: Ofgem – What happens if an energy supplier goes bust?
Happily, no energy suppliers have gone bust since the summer of 2022.
In 2021 and 2022, many suppliers became insolvent when rising wholesale energy prices caught out several small suppliers who had not hedged their pricing risk.
These suppliers had offered extremely attractive fixed-rate energy tariffs to attract new customers but could not fulfil the terms when wholesale spot prices of gas and electricity started to rise.
💡Learning from these failures, the best energy suppliers now actively hedge pricing risk against the fixed business electricity prices and commercial gas rates that they offer.
Who has replaced my energy supplier?
The list below shows the appointed Suppliers of Last Resort for energy suppliers that have gone bust since 2021.
Source: Ofgem – What happens if an energy supplier goes bust?
What should I do if my energy supplier is going bust?
It’s common to hear of an energy supplier going bust from the media before you receive any communications from your supplier.
If you hear that your supplier is going bust, Ofgem recommends that you refrain from attempting to switch suppliers, as this may not be processed correctly during the turmoil of a business becoming insolvent.
Ofgem recommends that you take regular meter readings and wait until you’ve been notified of your new supplier. If you have a smart energy meter, we still recommend taking meter readings, as the automatic reading process may be interrupted while you change energy suppliers.
We recommend that you cancel any direct debit you may have with your supplier during the process to ensure you control any payments being made.
You can always reinstate a direct debit later, as required.
Business energy supplier bankruptcies – FAQ’s
Our business energy experts answer frequently asked questions regarding energy supplier bankruptcy.
Who will choose my new supplier?
Ofgem, the energy regulator, appoints the Supplier of Last Resort when an energy supplier goes bust.
Ofgem’s published selection criteria for the Supplier of Last Resort state that they will give preference to suppliers who volunteer for the role.
In the appointment of new suppliers, Ofgem ensures that the new supplier has the capacity and financial resources to deal with the supply to the transferred customers.
Will my energy supply be cut off?
As mentioned earlier, your supply will not be cut off or disrupted. Ofgem will manage the process of switching you over to the newly appointed energy supplier.
Will I be put onto a new contract type?
Yes, if your energy supplier goes bust, your existing domestic or business energy contract with your supplier will no longer be valid.
Once the supplier transfer is complete, you’ll pay for electricity and gas under a variable-rate energy tariff. The variable tariff has no fixed term and allows you to switch business energy or domestic suppliers at any time.
My account is in credit; will I lose this money?
No, you will not. You will be refunded any money you have in the account that is in credit, minus any outstanding bills you owe for your energy consumption.
Ofgem will notify the new supplier that they appoint you of your credit balance. You then can have this repaid to you or keep it in your account as normal.
I’m in debt on my energy account. Will I have to pay my new supplier for this?
It depends on the exact process taken when your energy supplier goes bust. In general, you will need to pay someone for any debts you have on your domestic or business energy bills. You’ll typically need to:
- Continue paying the old supplier, or
- Pay the administrator of the old supplier or
- Pay the new supplier.
Your new energy supplier will tell you how this will work in your situation.