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UK energy crisis: What to do if your supplier goes bust

15/10/2021

Creditfix > Blog > Creditfix Debt Help Blog > UK energy crisis: What to do if your supplier goes bust

Now that the UK is going through an energy price crisis, the fear of increasing monthly costs and the possibility of your supplier going out of business seem very real.

The good news is there are barriers in place in the UK to stop you from having your power cut off, but you may still be wondering what exactly will happen if your supplier goes bust.

Below, we answer some of the more common questions relating to the UK energy crisis, but first, let’s take a look at what’s causing the crisis.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

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What’s causing the UK energy crisis?

The UK energy crisis is caused by a number of factors. One such reason is a lack of investment in new power generation.

In 2016, the UK government slashed subsidies to renewable projects and since then there has been little incentive to invest money into them – this means that electricity generated from renewable sources isn’t being produced quickly enough to meet UK demand, causing a supply and demand gap.

This is compounded by the UK’s reliance on old power plants that are shutting down at an increasing rate – most recently in September 2018 when one of Britain’s biggest coal-fired power stations was forced to close due to poor economics against gas and wind energy suppliers.

Combine these factors with the UK’s aging energy infrastructure, China trying to address its air pollution problem, and the price of natural gas soaring, and you have yourself a UK energy crisis.

Is my energy supplier likely to go bust?

It’s hard to predict whether your supplier will go bust during the energy crisis because that depends on multiple factors, most importantly who your current energy supplier is, and how well-insulated they are against fluctuating energy prices.

What is clear is that more and more UK energy suppliers are feeling the pressure. In the past few weeks, more than 10 British energy suppliers have gone out of business, with bosses claiming that soaring prices have made their businesses unsustainable.

While UK Business and Energy Minister Kwasi Kwarteng is urging calm, it’s clearly a difficult time for energy firms in the UK, and the discomfort felt by those firms is starting to spread to the customers themselves.

What happens if my supplier does go bust?

Given the current landscape, it’s understandable if you’re worried about a situation where your energy supplier eventually goes out of business. Here, we try to answer some of the questions you may have if you find yourself in that situation.

Will my power be cut off?

The first thing to acknowledge is that your power will not be cut off, as the Government has put measures in place to protect people from this happening.

The UK energy sector is overseen by Ofgem, the Office of Gas and Electricity Markets. Ofgem is an independent energy regulator that works to protect energy consumers in the UK, ensuring they are treated fairly by energy firms and can take advantage of a safe and sustainable energy market.

As part of that remit, Ofgem aims to take care of vulnerable customers whose energy supplier has gone out of business. It’s relatively common for suppliers to leave the market, and leave their customers behind.

Ofgem therefore has the capability to prevent those customers from being without power. If your supplier does go bust and Ofgem believes there is an immediate risk to your power supply, they will automatically switch you to a new supplier to ensure there’s no disruption to your power supply.

Will my bills go up if I am switched to a new energy supplier?

If your supplier goes bust and you’re automatically switched to a new supplier, you may be thankful that you still have power, but wondering what happens to your energy bill in that situation. Will it remain the same, or can the new supplier charge you more?

The good news is you’re protected by the energy price cap. The UK energy price cap was introduced in January 2019 as a measure to protect UK citizens from high power prices. The UK government initially set the price cap at a level of £1245 per year for each household.

That means that even if you’re switched to a new supplier after yours goes out of business, the new supplier won’t legally be able to charge you more than the price cap recommends.

Can the UK energy price cap go up?

The UK energy price cap is in place to protect UK citizens from high UK power prices, but the level it’s set at isn’t set in stone.

Ofgem reviews the price cap twice per year and will take numerous factors into consideration when deciding whether it’s set at the correct level, including the overall price of gas and electricity and the stability or volatility of the overall market.

When Ofgem last reviewed the price cap, they decided that the cap should be raised from October 1st 2021 in order to account for soaring energy costs. That means your energy bill right now should already incorporate the recent increase in the price cap.

Ofgem isn’t due to review the price cap again until April 2022, and it’s too early to say what the energy landscape will be like in 6 months time, but if energy prices continue to rise at their current rate it’s possible the price cap will need to be increased again.

Is now a good time to switch suppliers even if mine is still in business?

With the energy market as hectic as it is, many people are wondering whether this is a good time to switch to a new supplier.

If you’re with a small or independent energy supplier and you’re worried about your ability to keep the lights on, you may think you’re better off switching to a bigger supplier who is better placed to absorb the shockwaves being sent through the market.

That said, the energy market has largely stalled. Most companies aren’t taking on new customers right now, and the soaring cost of gas and electricity right now means that any new firm willing to take you on will place you on a tariff at the top end of the energy price cap anyway.

All things considered, it’s probably best for you to stick with your current supplier and try and ride it out. You know the company, you know where you stand, and if they go bust, you will probably end up the customer of a larger firm in any case.

What if I’m struggling to pay my energy bills?

If you’re finding it hard to make ends meet and are worried about paying your UK power bill, there may be options available to help you out.

There’s a range of UK government grants available to help UK citizens, including the Warm Home Discount and Cold Weather Payments.

You might also be eligible for a payment from your UK supplier called Guaranteed Credit – this is money set aside by UK energy suppliers in case you struggle with payments in future.

If all else fails, you should reach out to your supplier. UK suppliers may be able to arrange a repayment plan for you if they think there is no way you can repay what you owe in full.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

Related articles

Fuel poverty: Top tips to save on energy costs in the UK

 

Energy cap increase will hit those on Universal Credit

 

UK energy crisis: What to do if your supplier goes bust

15/10/2021

UK energy crisis: What to do if your supplier goes bust

15/10/2021

Now that the UK is going through an energy price crisis, the fear of increasing monthly costs and the possibility of your supplier going out of business seem very real.

The good news is there are barriers in place in the UK to stop you from having your power cut off, but you may still be wondering what exactly will happen if your supplier goes bust.

Below, we answer some of the more common questions relating to the UK energy crisis, but first, let’s take a look at what’s causing the crisis.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

What’s causing the UK energy crisis?

The UK energy crisis is caused by a number of factors. One such reason is a lack of investment in new power generation.

In 2016, the UK government slashed subsidies to renewable projects and since then there has been little incentive to invest money into them – this means that electricity generated from renewable sources isn’t being produced quickly enough to meet UK demand, causing a supply and demand gap.

This is compounded by the UK’s reliance on old power plants that are shutting down at an increasing rate – most recently in September 2018 when one of Britain’s biggest coal-fired power stations was forced to close due to poor economics against gas and wind energy suppliers.

Combine these factors with the UK’s aging energy infrastructure, China trying to address its air pollution problem, and the price of natural gas soaring, and you have yourself a UK energy crisis.

Is my energy supplier likely to go bust?

It’s hard to predict whether your supplier will go bust during the energy crisis because that depends on multiple factors, most importantly who your current energy supplier is, and how well-insulated they are against fluctuating energy prices.

What is clear is that more and more UK energy suppliers are feeling the pressure. In the past few weeks, more than 10 British energy suppliers have gone out of business, with bosses claiming that soaring prices have made their businesses unsustainable.

While UK Business and Energy Minister Kwasi Kwarteng is urging calm, it’s clearly a difficult time for energy firms in the UK, and the discomfort felt by those firms is starting to spread to the customers themselves.

What happens if my supplier does go bust?

Given the current landscape, it’s understandable if you’re worried about a situation where your energy supplier eventually goes out of business. Here, we try to answer some of the questions you may have if you find yourself in that situation.

Will my power be cut off?

The first thing to acknowledge is that your power will not be cut off, as the Government has put measures in place to protect people from this happening.

The UK energy sector is overseen by Ofgem, the Office of Gas and Electricity Markets. Ofgem is an independent energy regulator that works to protect energy consumers in the UK, ensuring they are treated fairly by energy firms and can take advantage of a safe and sustainable energy market.

As part of that remit, Ofgem aims to take care of vulnerable customers whose energy supplier has gone out of business. It’s relatively common for suppliers to leave the market, and leave their customers behind.

Ofgem therefore has the capability to prevent those customers from being without power. If your supplier does go bust and Ofgem believes there is an immediate risk to your power supply, they will automatically switch you to a new supplier to ensure there’s no disruption to your power supply.

Will my bills go up if I am switched to a new energy supplier?

If your supplier goes bust and you’re automatically switched to a new supplier, you may be thankful that you still have power, but wondering what happens to your energy bill in that situation. Will it remain the same, or can the new supplier charge you more?

The good news is you’re protected by the energy price cap. The UK energy price cap was introduced in January 2019 as a measure to protect UK citizens from high power prices. The UK government initially set the price cap at a level of £1245 per year for each household.

That means that even if you’re switched to a new supplier after yours goes out of business, the new supplier won’t legally be able to charge you more than the price cap recommends.

Can the UK energy price cap go up?

The UK energy price cap is in place to protect UK citizens from high UK power prices, but the level it’s set at isn’t set in stone.

Ofgem reviews the price cap twice per year and will take numerous factors into consideration when deciding whether it’s set at the correct level, including the overall price of gas and electricity and the stability or volatility of the overall market.

When Ofgem last reviewed the price cap, they decided that the cap should be raised from October 1st 2021 in order to account for soaring energy costs. That means your energy bill right now should already incorporate the recent increase in the price cap.

Ofgem isn’t due to review the price cap again until April 2022, and it’s too early to say what the energy landscape will be like in 6 months time, but if energy prices continue to rise at their current rate it’s possible the price cap will need to be increased again.

Is now a good time to switch suppliers even if mine is still in business?

With the energy market as hectic as it is, many people are wondering whether this is a good time to switch to a new supplier.

If you’re with a small or independent energy supplier and you’re worried about your ability to keep the lights on, you may think you’re better off switching to a bigger supplier who is better placed to absorb the shockwaves being sent through the market.

That said, the energy market has largely stalled. Most companies aren’t taking on new customers right now, and the soaring cost of gas and electricity right now means that any new firm willing to take you on will place you on a tariff at the top end of the energy price cap anyway.

All things considered, it’s probably best for you to stick with your current supplier and try and ride it out. You know the company, you know where you stand, and if they go bust, you will probably end up the customer of a larger firm in any case.

What if I’m struggling to pay my energy bills?

If you’re finding it hard to make ends meet and are worried about paying your UK power bill, there may be options available to help you out.

There’s a range of UK government grants available to help UK citizens, including the Warm Home Discount and Cold Weather Payments.

You might also be eligible for a payment from your UK supplier called Guaranteed Credit – this is money set aside by UK energy suppliers in case you struggle with payments in future.

If all else fails, you should reach out to your supplier. UK suppliers may be able to arrange a repayment plan for you if they think there is no way you can repay what you owe in full.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

Related articles

Fuel poverty: Top tips to save on energy costs in the UK

 

Energy cap increase will hit those on Universal Credit