Energy rights: what to do if your gas or electricity company goes bust

Updated on 22 November 2018

Extra Energy has gone bust, the sixth supplier this year. Here’s what you need to know if your energy company goes under and what you should do next.

Extra Energy collapses

Small gas and electricity supplier Extra Energy has collapsed, affecting 108,000 domestic and 21,000 business customers.

The company told the BBC that Ofgem's decision to introduce an energy price cap had made the market "unviable".

Extra Energy joins Future Energy, National Gas and Power, Iresa, Gen4U and Usio in the increasingly long list of failed energy suppliers in 2018.

In response, Ofgem has promised to tighten up the licensing of new firms, to ensure they have a viable business plan and the capacity to handle customer complaints.

However, with 72 different suppliers already licensed, it is possible that Extra Energy will not be the last to fail.

So here’s what you need to know and what you need to do if your energy company goes bust.

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What happens to my energy supply?

The good news is, there will be no disruption to the supply of gas and electricity to your home if your energy supplier goes under.

Ofgem has procedures in place to ensure no one is cut off in this worst-case scenario.

Philippa Pickford, Ofgem’s interim director for future retail markets, said: “If you are an Extra Energy customer, under our safety net, we will make sure your energy supplies are secure.

"We will also ensure that domestic customers’ credit balances are protected".

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What do I need to do next?

Ofgem has emergency measures in place that allows it to step in to find another supplier to take over your energy account in the event of a firm failing.

If you find yourself in this position you should take a meter reading and wait for your new supplier to contact you with more information about the transfer process. 

Ofgem's interim director Pickford said “Ofgem will now choose a new supplier and ensure you get the best deal possible.

"Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can continue to rely on your energy supply as normal. We will update you when we have chosen a new supplier who will then get in touch about your new tariff.”

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Will my bills go up?

When Ofgem chooses your new supplier you will be put onto a special ‘deemed’ contract – which means a contract you haven’t chosen that will last until you choose to change it.

The watchdog admits that these ‘deemed’ contracts are typically more expensive as suppliers take on more risk when stepping in to sign up new customers in a hurry.

However, Ofgem advises people not to switch immediately when a firm goes under and instead wait for a new supplier to be appointed before taking any further action.

This is so the new supplier can help you sort out any credit balances you might have had with your old supplier.

To protect from bill shocks Ofgem says that customers should ask to be put onto the cheapest deal when contacted by their new supplier.

You can compare deals using the loveMONEY comparison engine, which offers a whole of market view of the best prices.

If the new supplier isn’t competitive, you should switch. Ofgem says you won’t be charged exit fees.

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What if I am in credit with my old supplier?

If you were in credit before your supplier went bust, your new supplier will contact you about getting your money back.

Ofgem says a new supplier may choose to automatically credit money to your new account with them.

What if I am in debt with my supplier?

Ofgem says this depends on whether your new supplier agreed to take on customer debts.

If so, you'll need to pay your new supplier: they will be in contact to explain how this works.

If they don't agree to take on the debt then you may have to pay your old supplier through their administrator, but they should get in touch to arrange this.

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Where can I get further help?

If you have any concerns you should contact Citizens Advice on 03454 04 05 06 which is open Monday to Friday 9am to 5pm.

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Are small energy suppliers safe?

It's not been a great year for small energy firms.

Not only have some collapsed, but customer service can be hugely variable: Iresa was infamous for its average call waiting time of 40 minutes.

However, that’s not to say small energy firms are unsafe or not worth going for. They consistently offer competitive deals compared to the ‘big six’ energy companies British Gas, EDF, SSE, Scottish Power, E.ON and Npower which means they’re worth switching to if you want to keep your bills down.

According to Ofgem, the average saving of switching from a standard big six deal to a smaller supplier's cheapest deal could be £320.

Many of these new firms have excellent customer service – the top three spots in Citizens Advice’s customer service ranking are occupied by new players So, Bulb and Octopus.

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