Being a personal finance journalist does not (sadly) mean I am immune to the economic shocks that affect everyone’s household bills.
Along with more than two million other people in the past few weeks, I’ve found myself at the mercy of the energy regulator, Ofgem.
Our gas and electricity supplier, Igloo, failed on September 29, and our energy now comes from ‘Big Six’ supplier EON, at a price yet to be communicated.
We switched to Igloo nine months ago, drawn to a slightly cheaper deal on green energy than offered by a previous supplier, as well as 3% interest on credit accumulated in our energy account.
Ofgem has already told us the £277 in credit we had accumulated is safe, and I have taken meter readings and screen shots, to ensure I am even safer.
The failure of so many energy companies and the removal of many cheap tariffs raises questions for those involved — and even for those who aren’t with a failed supplier.
While I don’t know details of our new tariff, one thing I do know is our winter bills will be higher.
But is there anything that I, and others in my position, can do about it?
Why has my energy supplier failed?
Wholesale gas prices have soared since August due to increased demand. Energy companies are supplying gas to domestic customers at the rates they have agreed with them, but are having to pay far more for gas themselves. As a result, many have been unable to keep trading.
Will my energy supply get cut off?
No. Ofgem, which regulates the energy market, has a ‘supplier of last resort’ scheme. This means that gas and electricity continues to be supplied to homes while they are transferred from suppliers that have collapsed to new businesses. Neil Lawrence, Ofgem’s retail director, says he understands it is ‘unsettling’ when a customer’s energy supplier goes bust.
‘They do not need to worry. Their energy supply will continue as normal, and customer credit balances will be honoured,’ he says.
The energy suppliers who have gone under this year
Pure Planet October 2021
Colorado Energy October 2021
Igloo Energy September 2021
Symbio Energy September 2021
Enstroga September 2021
Green Shell Energy September 2021
Avro Energy September 2021
People’s Energy September 2021
Utility Point September 2021
MoneyPlus Energy September 2021
PFP Energy September 2021
HUB Energy August 2021
Simplicity Energy February 2021
Green Network February 2021
What if my account is in debit?
If you have a debit balance on your account — ie, you owe money to the energy supplier — the process may be more complicated.
The new supplier may agree to take on customer debts, or you may need to pay it back to the old supplier, or its administrator if bankrupt. It is really important to open any letters or emails you receive about this, so that you do not ruin your credit rating for unpaid debts.
Fortunately, we are at the end of the summer, so more accounts than usual are in credit as we use less energy in summer than winter.
Will I pay the same for energy as I am paying now?
If your supplier goes bust, you don’t keep your contract, whether it is a low-rate fixed price or a variable deal.
‘People who were on cut-price deals face horrible hikes in their energy bills,’ warns Sarah Coles, personal finance expert at financial services company, Hargreaves Lansdown.
Instead, your new supplier will decide what deal they will put you on, and you have little choice but to sit tight until they do. From the day they take on your supply, you pay their new prices.
Should I try to switch now?
Many of us have become accustomed to the concept of switching to get a better deal, but whether you are a customer of a failed supplier, or with one that is still trading, the truth is there is not much available right now.
Many of the energy switching sites have paused their services or have only a very limited number of tariffs you can switch to at present.
Richard Neudegg, head of regulation at Uswitch, says that because there is a regulated cap on the amount that companies can charge for gas and electricity on their standard rates, most people should stay where they are. ‘Hold tight if you are on a standard variable tariff as it is unlikely there will be a better-value deal to switch to, given the current unprecedented wholesale price situation,’ he says.
‘If you are on a fixed deal that is coming to an end, for most it is worth letting your deal roll over on to your supplier’s capped standard variable rate, too.’
How much more will I pay?
It is impossible to tell exactly how much individual bills will rise in the short term, as it will depend on the tariffs you are switched from, and to, as well as individual energy use.
However, the most recent price cap level, set on October 1, gives us an idea of what average prices are now. Those on default tariffs paying by direct debit saw an increase of £139 from £1,138 to £1,277. Those paying using prepayment meters saw an increase of £153 from £1,156 to £1,309.
These are just average prices of course, and your own bills will depend on energy use.
Richard at Uswitch points out that the present energy cap does not take into account the huge rise in gas prices that occurred recently, meaning that when it is set again in April, households will suffer even more. ‘We have a ticking time bomb on our hands,’ he says. ‘The government needs to act quickly to provide better protection for the most vulnerable over the coming months.’
Is there anything I can usefully do now?
While most of us who are affected by supplier failure need to sit tight and wait, there are some actions you can take.
The first is to take meter readings and upload them on your supplier’s internet site, if at all possible. Ensure that you take date-stamped photographs of your meters, even if uploading is not possible, in case the switching process goes wrong.
Similarly, if you can get into your energy account — no matter which supplier you are with — take screenshots of your credit or debit balance, in case they are needed in disputes later.
Once you are with your new supplier, you should check with them that the deal you are on is the cheapest one they have available for you, as they do not have to offer you this when you are switched.
You are also free to shop around with no exit fees though, as already mentioned, it may be best to wait until the dust settles.
Are there other ways to reduce my bills?
Trying to save as much energy as possible is an obvious one, and with gas prices so high, we all need to start budgeting for bigger energy bills.
Taking regular meter readings and sending them to your new supplier in the coming months will help to ensure that your monthly direct debit is set at the right level and you don’t go into debt. Meanwhile, you can sign up to email alerts with comparison sites such as Uswitch or the MoneySavingExpert Cheap Energy Club to tell you when better deals are available to switch to in future.
‘You’ll need to keep an eye on the market, so that when a better deal comes along, you can pounce,’ says Sarah at Hargreaves Lansdown.
‘In the interim you should work out how you are going to absorb the extra costs into your budget.
‘With your spending squeezed from all sides, this is no mean feat. But if you can make a list of everything you have coming in and everything you spend in a month, it’s much easier to track down the areas where you can cut back, so these higher bills don’t derail your finances.’