Saudi Press

Saudi Arabia and the world
Wednesday, Apr 24, 2024

Energy crisis: What do you do if your energy supplier goes bust - and which companies have already folded?

Energy crisis: What do you do if your energy supplier goes bust - and which companies have already folded?

Wholesale prices for gas have surged 250% since January, with a number of smaller firms entering insolvency - here is what to do if your energy firms goes bust.

More than a million people have now been affected by energy suppliers going bust after the price of buying gas on wholesale markets surged.

The rising costs are putting pressure on the suppliers - particularly smaller companies who are unable to pass on the increases to their customers - and households who face increased bills this winter.

Six firms already folded in September - PfP Energy, MoneyPlus Energy, Utility Point, People's Energy, Green, Avro Energy - and there are fears that more could follow, with Bulb and Igloo reportedly on the brink of collapse.

There are now roughly 40 suppliers in the UK market, sharply down from a peak of 70 in 2018.

Some of the UK's biggest energy companies could be offered state-backed loans in return for taking on customers from smaller suppliers.

However, Business Secretary Kwasi Kwarteng has repeatedly said he does not want to prop up companies that have been badly run, adding there is "no reward for failure".

Are you a customer of a small energy supplier and worried about keeping warm through the winter? Email us at news@sky.com

Below are answers to some of the key questions coming out of the crisis:

What if your supplier goes bust?


If a supplier fails, Ofgem - the UK's independent energy regulator - will ensure customers' gas and electricity supply continues uninterrupted.

Customers will be switched to a "supplier of last resort" and any credit with the old supplier will be transferred.

If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the government.

Your old tariff will end and the new supplier will put you on a special "deemed" contract, which will last for as long as you want it to.

The deemed contract could cost you more, as the new supplier takes on more risk (for example, possibly having to buy extra wholesale energy at short notice to supply to the new customers), but Ofgem says it will try to get the best deal for you.

Boris Johnson has pledged his government will 'do everything we can' to prevent energy companies going under as wholesale gas prices surge in the UK. File pic


You should take meter readings as you will need to pass these on to your new supplier.

Once your new supplier has been in touch, ask them to put you on their cheapest deal. Then shop around and switch if you want to. You won't be charged exit fees.

Why have gas prices risen so dramatically?


As in any market, the whole price of gas can go up and down - and costs typically do rise at this time of year, with an increased demand for heating and people switching on lights earlier in the day.

However, this year it coincides with the economy opening up from pandemic lows, so demand is even higher.

A perfect storm of other problems has also hit the sector: supply from Russia has dried up recently, demand is high in Asia and in the UK several gas platforms in the North Sea have closed to perform maintenance that was paused during the pandemic.

British Gas stepped in to operate People's Energy's supply after the company folded last week.


Will my energy bill rise?


It depends on what kind of deal you are on.

If you are on a fixed-price tariff, it means the price you pay is fixed for the length of your contract, so you won't be affected - but you will probably have to switch to a more expensive deal when your contract comes to an end.

If you are on a flexible tariff, this changes in line with wholesale prices.

The rise announced late last year, which came into effect in October, means that nobody covered by the price cap will see their bills rise by more than 12% before the next review, which is due to take place in April.

Ofgem has said consumers can expect an average price rise of £135 this winter.

Why are energy suppliers going bust?


Many smaller suppliers promised to sell gas to customers for less than it is now costing them to buy.

When people sign a fixed-term deal, the energy suppliers expect the price of gas to go up and down, which gives them some room for price changes.

But the unprecedented rise in global prices means a lot of customers are now paying less for energy than costs the supplier to buy, which is not a viable business strategy.

What is hedging and why have so many energy suppliers not done it?


The energy suppliers that stay afloat are likely to be those that have hedged - a type of insurance which steps in if prices rise too much.

But like all insurance, hedging costs money. So many suppliers - who are living on razor-thin margins anyway - decide not to and are now paying the price.

Some analysts fear the UK's energy companies could be drastically reduced over the coming months. File pic


How long could this last?


Europe's winter heating season typically begins in October and wholesale prices are not forecast to fall significantly during the remainder of this year.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Reports in Gaza: 5 dead from the impact of aid packages dropped by the USA
Apple warns against drying iPhones with rice
China Criticizes US for Vetoing UN Ceasefire Resolution in Gaza
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
The U.S. vetoed a U.N. Security Council resolution calling for a temporary ceasefire in Gaza, instead proposing its own six-week ceasefire plan contingent upon the release of all hostages held by Hamas
Prince William Urges End to Gaza Conflict
Saudi Arabia ranks first in UN index for e-government services in MENA
Israel has gone ‘beyond self-defence’ in Gaza, says Labour’s Streeting
EU Calls for Immediate Ceasefire in Gaza Conflict
Israel Records 20% Drop In GDP, War In Gaza Is The Reason
Saudi Arabia's FDI Inflows Grow with New International Standards
Venture Capitals Power Up Across MENA Region
Saudi Arabia Introduces Terms for 30-Year Income Tax Exemption for Multinational Companies
Saudi FM: Establishing Palestinian state is only pathway for Mideast stability
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
Elon Musk's Starlink Gets License For Israel, Parts Of Gaza
Influencers Exploit X Platform for Profit Amidst Israel-Gaza Conflict
PM Modi Announces Opening Of New CBSE Office In Dubai
International Criminal Court's Chief "Deeply Concerned" By Rafah Bombing
January Funding for MENA Startups Totals $86.5 Million
Saudi Arabia accelerates digital economy growth through Nvidia partnership
Indian female military officers commend Saudi Arabia's progress and women's empowerment
Israel unveils tunnels underneath Gaza City headquarters of UN agency for Palestinian refugees
Israel deploys new military AI in Gaza war
Egypt threatens to suspend key peace treaty if Israel pushes into Gaza border town, officials say
Israel Utilizes AI Military Technology in Gaza Conflict
Saudi Arabia Warns Of A "Humanitarian Catastrophe" If Israel Moves On Rafah
China Warns Iran to Halt Houthi Attacks or Damage Trade Ties
US University To Shut Qatar Campus Due To "Heightened Mideast Instability"
Iran-backed hackers interrupt UAE TV streaming services with deepfake news
Facebook and Instagram Ban Iran's Supreme Leader
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
U.S. Secretary of State Blinken: The Israelis underwent dehumanization on 7.10, this does not give them the right to do this to others.
Defense Technology Showcase Held in Riyadh
Saudi Arabia’s non-oil exports rise 2.5% to $6bn in November 2023: GASTAT
UK Bans Misleading "Zero Emissions" Claims for Electric Cars
Gaza's Teen Inventor Sparks Light in Displacement
Netanyahu Rejects Ceasefire Proposal, Insists On Total Victory Over Hamas
Guterres appoints independent UNRWA review panel
Private Sector Employment Hits Record High with Over 11 Million Employees in January
Rolls-Royce Executive Encourages Saudi Women to Tap into Their Inner 'Superhero' for Success in Defense Industry
Saudi Arabia launches National Academy of Vehicles and Cars
Saudi Tourism Minister Reveals Plan for 250,000 New Hotel Rooms by 2030
SAR to more than double eastern network passenger capacity with new trains deal
Saudi Arabia Enhances National Defense with New Partnerships
Saudi Aramco Maintains Arab Light Crude Pricing to Asia for March
NEOM Establishes New York Office to Support Investors
Saudi Wealth Fund Draws in Over $25 Billion Worth of Investments in Three Years, Al-Rumayyan Reveals
ZATCA Cautions Against Scammer Schemes
INTRA Defense Technologies inaugurates drone factory in Riyadh
×