Experts warn households could be forced onto more expensive energy tariff with new supplier by the end year
Hundreds of thousands of households could be forced to move to a more expensive energy tariff with a new supplier by the end of the year, experts warn.
Five suppliers have gone bust in the last 12 months and further casualties are predicted.
When a supplier fails, the energy regulator Ofgem appoints a new supplier to take on its customers.
Out in the cold: Tariffs offered by the new provider are often more expensive
However, tariffs offered by the new provider are often more expensive. Tonik Energy became the latest supplier to go out of business last week, with 130,000 customers now being shunted on to more expensive energy deals with ScottishPower. Former Tonik customers with average use could soon be paying £160 a year more unless they find a better deal.
Andrew Long, founder of Switchcraft, which automatically moves customers on to cheaper energy deals on their behalf, warns that there are signs other suppliers could be struggling.
He points to the fact that 23 suppliers missed a deadline for paying mandatory Government levies that support renewable energy. Seven suppliers have still not paid, one of which was Tonik Energy. Long adds: ‘We could well see more suppliers failing in the coming weeks.’
Ofgem has warned the remaining six companies with £25million still outstanding that it could take further enforcement action and potentially revoke their licences. Their late payment deadline is now the end of this month. The suppliers are: Co-op Energy, Flow, MA Energy, Nabuh, Robin Hood and Symbio.
Both Co-op Energy and Flow were taken on by Octopus Energy in August last year, a brand that itself has flourished.
Long says: ‘If your supplier goes bust and you’re switched supplier by the regulator, watch out. Your new tariff will probably be a lot more expensive than the deal you signed up to, so it’s essential to shop around once the dust has settled.’
Ofgem recommends that anyone whose supplier goes bust should note their meter reading and wait until their account with the new provider is set up before deciding whether to switch away.
Any credit owed to customers will be honoured by a new supplier – but compensation from an unsettled complaint won’t be.