What happens when your energy supplier goes bust?

If your business energy supplier goes bust or stops trading, don’t worry – your energy supply won’t be disrupted. Ofgem, the UK’s energy regulator, has processes in place to ensure that your premises continue to receive power and that you are switched to a new supplier without interruption. Here's what you need to know. 

What’s the difference between going bust and ceasing to trade? 

• Going bust means the company closes down completely, is removed from the Companies House register, and has its assets sold off to pay creditors. 
• Ceasing to trade means the company halts its operations but remains registered as a limited company. 

Steps to take if your supplier goes bust 

1. Take a meter reading: Taking a meter reading helps ensure your final bill is accurate. It’s also a good idea to cancel any Direct Debits, although waiting until you’ve signed up with a new supplier may be advisable. 
2. Wait for a new supplier: Ofgem will automatically appoint a new supplier under its safety net. You’ll typically be informed about your new supplier within 72 hours, and the switch will be completed within 14 days. 
3. Shop around for a new deal: Once the new supplier is appointed, you can negotiate a new energy contract. Don’t settle for the first deal offered to you, as this could be a good time to shop around for better rates, especially since you won’t face any exit fees. Contact Bionic on 0800 156 0899 to explore competitive options for your business. 

How long does it take to switch suppliers? 

Once your supplier goes bust, Ofgem aims to appoint a new supplier within 14 days. The regulator will enter the supplier’s contracts into a bidding process, where suppliers will compete to offer the best deal for customers. 

For businesses with smart meters, if the new supplier doesn’t support the smart meter, it will function as a regular gas or electricity meter, and you’ll need to take manual readings. 

What happens to your energy contract? 

If your supplier ceases trading, your contract with them automatically ends. Ofgem will then place you on a deemed contract or a variable rate plan, which generally comes with higher rates than your previous fixed deal. These higher rates compensate the new supplier for the added risk of taking you on as a customer without knowing your payment history. 

What if you're in debt with your old supplier? 

If you owe money to your previous supplier, you’ll still need to pay off your debt. A new supplier may take on your debt and set up a repayment plan. If an administrator handles the debt, you’ll receive bills from them, not your old supplier. It’s important to arrange a repayment plan that works for your business, especially if you’re struggling financially. 

What if you're in credit with your old supplier? 

In the case of credit on your account, Ofgem will try to ensure your new supplier refunds some or all of the amount owed. However, this isn’t guaranteed. If the credit can’t be refunded, you may need to contact your old supplier’s administrator to reclaim the funds. Be prepared for this process to take some time – potentially over a year – and you might not receive the full amount owed. 

What happens if you're switching and your new supplier goes bust? 

If you're in the middle of switching and your new supplier goes bust, you’ll be switched to the chosen Supplier of Last Resort (SoLR). If this happens, you should immediately look to arrange a better-priced fixed contract with that supplier or a different one. 

What happens if you're switching suppliers and they both go bust? 

If you're in the middle of switching business energy suppliers and both go bust, the outcome depends on how far along the process you are: 

• If the switch has been completed: You will be transferred to the Supplier of Last Resort (SoLR) for the supplier you were in the process of switching to. 
• If the switch hasn’t been completed: You will be transferred to the SoLR for the supplier you were leaving. 

In either case, your energy supply will remain uninterrupted, and you’ll be switched to a new supplier without any disruption. 

How does Ofgem choose a new supplier? 

Ofgem’s primary goal in selecting a Supplier of Last Resort (SoLR) is to ensure that all customers continue to receive a steady supply of gas and/or electricity. 

When choosing a new supplier, Ofgem looks for one that can quickly and efficiently take on new customers without negatively affecting its existing ones. The selected supplier must also demonstrate it has the capacity to secure enough energy to supply the new customers without causing significant cost increases. 

Additionally, Ofgem considers whether a supplier is willing to voluntarily reimburse customers' credit balances. If no supplier is willing to take on customers from a failed supplier, Ofgem will appoint the supplier it considers most capable of handling the situation. 

What to do while waiting for your new supplier 

While you wait for your new supplier, take the following steps: 

• Take meter readings and note down the numbers
• Keep any recent bills as they help verify your account balance
• Note your account balance and check it against your most recent statement

Additionally, avoid cancelling your Direct Debit until your new account is set up to prevent payment issues. 

What if you have an unresolved complaint? 

If you have an outstanding complaint with your old supplier, bring it to your new supplier. They aren’t obliged to resolve complaints from the previous supplier, but if your case was escalated to the Ombudsman, they’ll follow up with you. 

Can you switch from your SoLR to a new supplier?

Yes, and we recommend that you either switch or arrange a fixed-rate deal with your SoLR as soon as possible. This is because they'll place you on deemed or variable rates, which are much more expensive than fixed rates.

If you're in this situation, call the business energy experts at Bionic on 0800 140 4667 today and we'll compare quotes to find you more competitive rates.