2018 – The Year of the Fallen Energy Supplier

by 20 December 2018

Last month Extra Energy, a large energy supplier to both business and domestic users ceased trading, affecting approximately 129,000 customers. This means that since January of this year a total of 8 Energy suppliers have collapsed, including Future Energy, National Gas & Power (Business closure only), IRESA, Gen4U, Usio Energy, Spark Energy, Extra Energy and One Select.

Where does this leave the customer? and does it mean that they will end up without a choice on who will be their new supplier?

If an energy supplier ceases to trade Ofgem appoint a Supplier of Last Resort (SOLR). ‘Ofgem’s safety net will make sure you’ll always (the customer) have an energy supply, and will feel as little change as possible’ Ofgem. This means there will be no disruption to your supply.

In the case of Extra Energy Ofgem made the decision to appoint Scottish Power to take over their customers accounts and as of the 25th November 2018 this took effect. This could be wrongly interpreted, giving the impression that businesses should stay with the supplier that is allocated to them. However, that is not the case, the choice to transfer the accounts automatically to an alternative supplier by Ofgem is simply an emergency measure to ensure your energy supply is not disturbed. Businesses still have the right to shop around and choose their own suppler, they will not be charged any exit or penalty fees by the new temporary energy supplier, in Extra Energy’s case – Scottish Power.

Following any transfer customers will have been put on deemed rates these are higher than normal, meaning you will be paying more. Ofgem confirmed this by saying ‘Your new supplier will put you onto a special ‘deemed’ contract (this means a contract you haven’t chosen). This contract will last for as long as you want it to. Your bills may go up, as ‘deemed’ contracts can be more expensive.’ The increase in your bills can be anything up to a huge 80% increase, which could mean you bills will almost double.

Here at Utility Team we wanted to put our customers minds at rest in what was an anxious situation and have ensured any customer previously connected with Extra Energy has already obtained a better deal. We are fortunate enough to have direct relationships with the majority of suppliers (Including Scottish Power) in the UK and are able to fix contracts for up to 5 years, protecting customers from the forecasted price hikes that have been well documented in the national press (for more information on please see our October newsletter- here).

Ofgem have now announced that more stringent checks will be done on new entrants to the market. ‘Companies would have to demonstrate they have adequate financial resources and can meet their customer service obligations before Ofgem awards them a licence to supply energy.’ The regulator said such measures would ensure small suppliers are robust while still encouraging competition within the market, as well as supporting the customer and their expectations.

If you have lost your energy supplier due to these circumstances, we would be happy to advise and discuss your options. We can help you source a new supplier if necessary and would ensure we make the process a simple one. We understand that this situation can be very stressful for business owners and certainly not something that they will be familiar in dealing with. This is something we can help with.

Call or email us today:
02476 997901

Article written by: Kirk Cadden, Senior Business Energy Consultant