How Many Suppliers Have Gone Bust?
Over the last 19 years, 18 suppliers have collapsed, with the vast majority going bust in the last 2 years (14 since mid-2018). Another 3 suppliers have left the market in other ways, which means a grand total of 21 suppliers have exited the market in since the year 2000.
This accelerating trend has begun to worry some – and has even led Ofgem to take action, by tightening their standards for new suppliers, and setting up a mandatory supplier licencing scheme.
Thankfully, customers who are affected by a supplier collapses are protected by Ofgem’s safety net, which means that your supply will not be cut off, and you will not lose any money in credit.
Here are some of the more recent collapses*:
|Supplier||Approx. Date of Collapse||Number of Customers at time of collapse||Supplier who took over|
|Our Power||25th January 2019||31,000||Utilita|
|Brilliant Energy (inc. Northumbria)||10th March 2019||17,000||SSE|
|Cardiff Energy Supply||8th August 2019||800||SSE|
|Solarplicity||13th August 2019||7,500 Domestic, 500 Business||TBA|
*For the full list going back to the year 2000, please email firstname.lastname@example.org.
Why are so many suppliers going bust in recent years?
There many theories out there. Some of the most commonly cited reasons are:
- An overcrowded market
- Rising Wholesale energy prices
- The Price Cap
What are the signs that a supplier might be struggling?
With the sheer volume of recent collapses, there are certain patterns and “red flags” we have noticed tend to pre-date a collapse. Though these issues are by no means a guarantee that supplier is struggling or will fail, they may be troubling to some.
Supplier Red Flags
Potential red flags to look out for include…
- A drop in customer service availability or quality, or a rise in customer complaints
A rise in complaints can be the first sign that something is up. Naturally, handling extra complaints can negatively affect how quickly you can get through to customer service too. Most suppliers have improved their call wait times recently, and more variety of ways to get in touch means that suppliers can’t dodge your questions.
If you’re concerned about your supplier, remember to take notes of who you spoke to and when, plus what they have promised you. This can give you the backup to ask for better if your situation isn’t resolved. If the worst comes to the worst, you can give a detailed report to the Ombudsman, who can act on your behalf.
- A low star rating
Several of the energy suppliers that have gone bust in the past months had a 1-star rating. A low star rating will often reflect that the supplier receives a lot of complaints, or is not very good at responding to customers. It does not mean that when a supplier has this rating it will go bust, however it will be wise to look into the supplier in more detail before committing to one of their energy offerings.
- Not returning money due to customers (credit balances etc.)
There have been suggestions that some suppliers have been keener than usual to hold onto customer in-credit balances over winter, while wholesale prices remain high. What’s more, with increased scrutiny from customers and the media, some are trying to ensure a healthy cash flow over this period to reassure the regulator.
- Unpaid bills (i.e. to smart meter companies or other providers)
If a supplier can no longer meet its obligations to its own suppliers or the government, there’s a chance they’ll soon start to struggle to service their customers. Ofgem is introducing more rigorous requirements on who can become a supplier, which should guarantee a better level of financial stability amongst suppliers, reducing the chance of this kind of collapse. However in the meantime, records of any suppliers who have failed to pay money owed to the government, such as renewables obligations and contributions to the safety net, are available on the Ofgem website.
- Warnings and/or disciplinary actions by Ofgem
When Ofgem get involved, it’s a sign that your supplier is in hot water. However this can be a good thing, as they have plenty of measures in place to improve suppliers’ performance. Even if the supplier can’t be saved, money owed to you is protected and your supply will remain constant while a competitively chosen interim supplier takes over.
Ofgem’s news site is a good place to check to see if this is happening to any particular supplier.
What should I do if my supplier looks like they might be struggling?
If you’re worried about your energy supplier’s future, you may want to set up a Google Alert about them. If respected news sources start reporting that there may be issues with your supplier, it may be advisable to start thinking about switching away to supplier that suits you better.
Note: You may be able to avoid exit fees
Many people worry about having to pay exit fees if they leave their supplier early. But you can often get your new supplier to cover the cost for you. Some suppliers already doing this; others may give your new account credit which is equivalent to the typical exit fee. If you switch to a cheaper supplier, the money saved may quickly outweigh the exit fees – as the average energyhelpline customer saves £300 in a year.
It’s also worth knowing that everyone can switch up to 42 days before the tariff end date without incurring a cancellation or exit fee.
What should I do if my supplier goes out of business?
Be aware there is nothing to fear – except possibly higher bills. Though the safety net will protect your supply coming in, the cost of your energy is less certain, and could very well go up. Fortunately, it is free and easy to remedy this – all you have to do is select a new supplier that suits you – whether it’s a supply with a 5-star quality rating, a top bargain, or perhaps all of the above.