- Energy crisis – what you need to know
The full guide regarding the energy crisis
Gas prices have gone up 250% since January and 70% in the last month.
At the point of publishing, the companies Utility Point, People’s Energy, Money Plus Energy, PFP Energy and Hub Group have ceased trading and Ofgem is arranging new suppliers for the customers of those companies. Others are in crisis talks.
Why is there such an increase?
This has been caused by a number of factors and the Guardian article What caused the UK’s energy crisis? outlines in detail all the things that have happened to come together to cause a “perfect storm”.
- Increase in supply from Asia particularly China and Latin America.
- Decrease in supply from Russia.
- Gas is normally stored in the Summer months, but the globally cold Summer meant gas supplies down.
- 50% less wind last year so that storage is down.
- Covid has meant more supply of gas.
- The price cap on energy is removed on the 01/10/21
The current energy crisis is causing worry for many of us. Wholesale gas prices in the UK have more than quadrupled over the last year. Nuclear power plants have been forced to undertake unplanned outages for maintenance, a main power cable used to import electricity from France was shut down after a fire, and the UK’s wind turbines have slowed during some of the least windy months since 1961.
So, where does it leave consumers. What do you need to know?
What does Ofgem say?
A spokesperson for Ofgem said:
“We know that the current situation with high wholesale energy prices is putting pressure on customers and energy companies. This is a global issue.
We have the systems and processes in place to ensure that customer needs are always met.
For those customers who are with energy companies that can no longer trade, a new supplier will be appointed. Ofgem is working closely with government to manage the wider implications of the global gas price increase.”
What does Government say?
The Department for Business Energy and Industrial Strategy (BEIS) said that
“Ofgem has robust measures in place to ensure customers’ gas and electricity supply will continue uninterrupted if a supplier fails, however, if the appointment of a Supplier of Last Resort [a new supplier] is not possible, Ofgem and the government have agreed processes in place to appoint a special administrator to temporarily run the business until such time as a new supplier can be found.”
My supplier has gone bust – what should I do?
You are protected by the regulator, Ofgem.
It will step in and inform you of your new supplier. This is known as “supplier of last resort”. This is well named, as it may not be the best deal! But you can and should look to switch when things settle down. You should hear within a few days of your company going bust.
The new supplier will place you on a “no exit fee” tariff. Ask the supplier to put you on the cheapest tariff.The importance of switching energy suppliers and telecom providers on ITV News
What actually happens?
Ofgem normally invites suppliers to bid to take on the accounts of those companies that have gone into administration. This helps them get the best deal for consumers. It is slightly more difficult at the moment due to so many being at crisis point and the negotiation needed to take on debts as well as credits. This is why there is a lot of discussion around the likelihood of so many suppliers going under, as the smaller ones may not be able to take on new customers and any debt.
This process should only take a few days.
Is there any possibility of having my energy supply cut off?
No. Regardless of whether you owe money or not, Ofgem’s safety net ensures that supply will continue. You will not notice any difference other than receiving a letter from your new supplier.
Should I switch supplier now?
No. Although switching is usually a good idea and you can usually save a lot of money, there is currently too much turmoil in the sector to be sure that you are getting the best deal. Wait until things have settled down.
It is also possible that you may lock yourself into a deal and the price of wholesale gas will come down.
What’s the price cap?
Price caps on put on out-of-contract energy deals. From 01/10/21 the current price cap will be upped and will add, on average, £139 toon average to annual bills. This will be more if you have a prepayment meter or use lots of energy.
I’m in the middle of a switch – what do I do?
The switching process will continue, as normal. You will move to the new supplier. If the new supplier is one that has gone bust you will automatically be moved to the one that has taken over.
I think my supplier may go bust – what should I do?
Sit tight and wait. But do take a meter reading for your electricity and gas meters so that you know how much energy you have used.
You may not be able to access your bills if a company goes bust, so make sure you download the bill so you have the evidence.
I am in credit – what will happen to my money?
The new supplier shouldn’t take any payment if you are in credit. You should also be refunded your credit. How this will be done will be explained to you by the new supplier.
I am in debt – what will happen?
You will need to pay the debt to either the old supplier’s administrators or the new supplier, depending on what deal is agreed between the old and new suppliers.
I’ve got a smart meter – what happens to me?
You will still be transferred to another supplier. However, if your new supplier cannot operate your meter in “smart” mode it will put you into a “dumb” meter mode, using your existing one. Your smart meter will work as a smart meter again if you switch to a supplier that can operate with smart meters.
What should I do about the direct debit?
The new suppliers will explain to you what will happen with your direct debit but you can cancel and set up a new one if you wish to do so.
I can’t afford the new bills – what do I do?
Notify your supplier as soon as possible as you may be able to set up a payment plan.
Look to switch as soon as you know your new supplier. Use more than one comparison website. Also look direct with the cheapest on the comparison site as they may have a deal or you could use a cashback site. See my article Do Morethan just comparison websites for insurance quotes!
If you are vulnerable you should already be on your supplier’s priority register
Ofgem provides help with links from its page Getting help if you can’t afford your energy bills. Its rules state that suppliers must work with you to help you. This includes setting up a payment plan, breaks, more time to pay, access to hardship funds and details about the Priority Register. If you are vulnerable you should be on your supplier’s list.
There may also be access to hardship funds and grants from various organisations. You may also get 60 days’ space from creditors to focus on getting debt advice and setting up a debt solution. An excellent site for Debt advice is Debt Camel.
I currently have a complaint with my supplier which has gone bust – what can I do?
Unfortunately, there is no requirement for the new supplier to resolve your complaint. However, if the issue persists with the new supplier you will need to discuss the matter with them.
If your matter is with the Energy Ombudsman, then wait for it to contact you to discuss what will happen.
I don’t know who my supplier is!
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