Answer: Millions of customers have seen their energy supplier go bust in the past year. The price of crude oil has soared, which means suppliers are paying more for it. The consequent rising price of gas put pressure on suppliers, and smaller companies that were offering cheaper rates were unable to pass on the increases to customers.
If your supplier falls into administration, it’s likely that you’ll end up paying more on a new tariff – not least because most of the energy companies that went bust last year were offering very cheap deals. But it’s also because if you were on a fixed deal with your former supplier, the contract you had for that tariff was only applicable to that provider.
When suppliers go bust, Ofgem, the energy regulator, steps in to move customers to new energy providers – a process known as “Supplier of Last Resort” (SoLR). This means there will be no interruption to your gas and electricity supply.
Frustratingly, lots of customers whose previous supplier has gone into administration will, like you, have credit with them. You won’t lose this money: SoLRs will work with administrators to determine the final credit balances, and they should communicate this with you (if they haven’t already done so).
Unfortunately, there’s no set time for when you should receive the credit and have it transferred to your account with the new supplier. How quickly this can happen depends on a range of factors.
First, the quality of data held by the failed supplier, and how good it was at passing it on to Ofgem or the new supplier. Second, it will also depend on the number of customers being migrated – the more customers to get through, the longer it will take. And third, the arrangements made between a SoLR and the administrator for the failed energy company.
If you feel like you have been waiting for an unreasonable period of time, you could query the process with your new supplier or Ofgem.
It’s worth noting that if you’re on a fixed deal that you secured when prices were lower, now is not the time to switch energy suppliers. In normal times, Which? advice would be to look around for cheaper deals. However, these all but disappeared from sale in autumn last year.
Sadly there are no cost effective options right now. The energy price cap has been predicted by energy consultancy firm Cornwall Insight to rise to £3,582 for a typical user paying on direct debit for a variable tariff from October 2022. This will put further strain on millions of households who are already struggling with bills.
Generally, price-capped variable deals remain the cheapest options on the market, so customers like you whose suppliers have gone bust are likely to be best off being moved automatically onto your supplier’s out-of-contract rate when your fixed deal ends.
While fixing a tariff does provide more security, no energy company is currently offering a cheaper fixed deal than the price capped variable rate, which means that security comes at a cost. The best option for now is to stick to the variable (price capped) tariff, and to keep an eye out for any fixed deals that could work out cheaper for you in the long term.
If you’re concerned about how you will pay for energy bills now or in the future, make sure you check your eligibility for various government support schemes, such as the Warm Home Discount or Winter Fuel Payments.
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