There might be a bigger choice of energy firms than ever before, but is it lights out if your supplier ceases trading?

The energy market has opened up in recent years after regulator Ofgem relaxed its rules on granting licences, and we’ve seen lots of new entrants into this arena – with the total number now standing at more than 60. 

While this is good news for consumers because increased competition should mean lower prices and much-improved switching rates, we have also seen a number of smaller providers collapse. 

Two suppliers went bust in November and more casualties could follow this winter if newer companies cannot attract enough customers. 

Spark Energy, for example, collapsed at the end of November, just days after Extra Energy went out of business. Extra Energy had more than 100,000 domestic customers, while Spark Energy had nearly around 290,000 customers. 

Other firms which have stopped trading include GB Energy, Future Energy and Iresa. It would be natural is this news made you distrustful of the energy market and wary about switching. 

You might feel worried that you could end up with extra hassle and even be at risk of losing money if you move to one of the newer providers. Here we take a closer look.

Customers should stay calm 

The good news is that if your energy firm ceases trading, your gas and electricity won’t be cut off. This is because the regulator Ofgem provides a safety net which ensures you get continuity of supply. 

Not only will there be no interruption to your energy supply, but your credit balances will also be protected. Ofgem will organise a new supplier who will be in touch in due course.

In the case of Extra Energy, for example, customers were moved to Scottish Power. In the case of Spark, customers were moved to Ovo Energy. Customers of Iresa Energy were taken over by Octopus Energy. 

What action do you need to take?

While you are waiting for to be moved to a new provider, it’s worth taking a meter reading. 

This should help make the process of transferring and paying back outstanding credit balances as smooth as possible.

But you should avoid switching right away, as by switching, you risk losing any refunds you might be entitled to. 

The key is to be patient, and wait for Ofgem to appoint a new supplier, who will get in touch with details of its tariffs. 

Will I get the same tariff?

When you get moved to a new provider, you may remain on the cheap tariff you were on, but there are no guarantees – so the price you pay may change. 

While the regulator strives to get you the best possible deal, you will usually get put on something called a ‘deemed contract’ (one you haven’t chosen) – and it is highly likely you will pay more than previously. 

You will, however, not be tied in with any exit penalties, meaning you are free to move to another more competitive deal. 

Once you’ve found out the details of your new tariff, the key is to compare deals to see if there’s a better one available elsewhere, as you may be able to make savings by switching. You can do this at

Given that prices are on the rise, you may want to consider a fixed-rate tariff. This type of tariff guarantees no price rises for a set period, meaning you won’t get any nasty surprises. 

For more information

You can find out more on the Ofgem website.

You can also get help by contacting Citizens Advice. The number for the consumer helpline is 03454 040506. 

New licensing reforms

In mid-November, Ofgem announced new supplier licensing reforms for firms wishing to enter the energy supply market. 

These are designed to protect customers from energy firms that are unprepared or financially unsustainable. 

It is hoped that the new proposals to increase scrutiny of new suppliers before they get their licence will give customers more confidence their supplier has been vigorously tested before being allowed to operate.

There’s still plenty of competition

In the meantime, consumers should remain reassured that competition in the market remains healthy, with plenty of options to switch to reliable providers to secure a better deal. 

When searching for a new supplier, the key is to look not only at price, but also at customer service, as this will give you more rounded information about the company you are considering.

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