What should you do if your energy supplier goes bust?
If your business energy supplier has ceased trading, call Northern Gas and Power on 03 300 300 800
Over the past year, we’ve seen record-breaking price increases in the wholesale energy market. One of the impacts of this has been the demise of a number of energy suppliers.
If your energy supplier was to go bust, would you know what to do? In this piece, we cover everything you need to know if your supplier was to cease trading.
Will your energy supply be cut if your supplier goes bust?
If your business energy supplier folds, you may also be worried about disruption to your energy supply.
Fortunately, you would never be ‘cut off’. Ofgem, the UK energy regulator, has systems in place to protect your energy supply.
Ofgem will ensure that your business doesn’t go without power, and will switch you to a new energy supplier as soon as they can.
Why are energy suppliers going bust?
Wholesale gas prices have surged more than threefold, meaning some suppliers can no longer afford to provide customers with the energy they have paid for. Suppliers often buy their energy in bulk, and the record prices have left many suppliers unable to buy enough energy.
A combination of worldwide factors have pushed gas prices to record highs:
- A cold winter in Europe increased pressure on supplies and depleted gas storage levels, increasing demand and pushing prices higher.
- Lower levels of wind generation in summer 2021 further reduced supply.
- Increased energy demand from Asia also put pressure on liquified natural gas (LNG) supplies.
- Delays and complications to the Nord Stream 2 pipelines, including Germany’s recent refusal to approve the gas pipeline in response to Russia’s actions in Ukraine.
- Maintenance and fire damage to pipelines supplying gas to the UK
To learn more about energy prices in the UK, see our guide on what businesses can do to mitigate the high cost of energy.
What happens if your energy supplier stops trading?
If your energy supplier folds, Ofgem will appoint a new supplier.
Ofgem recommends you do three things if your business energy goes bust:
1. Take a meter reading
To ensure your final bill is accurate, it’s worth taking a meter reading. Keep a record of your energy bills whilst you wait for a new supplier to be appointed.
2. Wait for Ofgem to appoint a new supplier
Because of Ofgem’s safety net, a new supplier will be appointed within 14 days. There should be no disruption to your business energy supply. Once your new supplier is appointed, they’ll be in contact with you directly.
3. Shop around
When your new supplier gets in touch with you, you can negotiate a new procurement deal. This is also a good opportunity to shop around and switch suppliers, because you won’t be charged exit fees. Speak to Northern Gas and Power to see if you could get a better deal for your business.
What happens to your energy contract when you get a new supplier?
Your previous contract with your past supplier will end.
Your new supplier will also put you on a deemed contract, which will be on a rate that you haven’t chosen. They’re often much higher than agreed rates, as your new supplier doesn’t yet know you as a customer.
The higher deemed rates are also intended to cover the new supplier’s additional wholesale costs. When factoring in the short notice, suppliers will pass the extra charges onto the customer.
Deemed rates will last for as long as you decide. You should review your contract options with your new supplier as soon as they’re appointed, or look to shop around and switch suppliers if you want to. There won’t be any exit fees.
What should you do if you’re waiting for a new supplier?
If you’re waiting for a new supplier to be appointed, you can actually do a few things to help you prepare:
- Download your energy bills as you can also use this to show your balance.
- Keep a record of your account balance. You should find it on your most recent bill.
- Do not make any changes to your direct debit details whilst you’re waiting for your new supplier to be appointed.