Feeling the heat? It’s so easy to move your supplier

issues. But it is not always a case of the smaller the better. Some embryonic players could be at risk of becoming overwhelmed when things go wrong if they lack the resources to cope.

For example, fledgling provider Iresa is banned from taking on new customers or increasing the direct debits of existing customers while it seeks to resolve customer service problems. The ban is in place until the end of this month. If it fails to meet targets set by energy regulator Ofgem its licence could be revoked.

Malinowski also warns that cheap deals offered by cash-hungry small suppliers, against a backdrop of bigger players increasing prices, could signal wider problems.

He says: ‘There are cheap deals being offered by small companies that take customer money upfront, before energy has been provided. This could be a sign of financial stress and some of these companies are unproven.’

Yet mid-tier challengers are not without their issues. On Friday Ofgem announced it is investigating how Utility Warehouse manages customers in debt.

Victoria Arrington, of energy comparison site Energyhelpline, says: ‘Loss-leading tariffs could be a viable method of doing business if done with care – as many suppliers do. If not, this strategy could potentially lead to the supplier going under.’

But she says customers should not be overly fearful. She adds: ‘Energy is the easiest household bill to switch and can result in an annual saving running into hundreds of pounds.’

Should a supplier go bust, energy regulator Ofgem will step in to find another provider, a supplier of last resort. But customers may then be moved onto a more costly tariff with the new supplier and any disagreements about billing under the previous one will prove hard to reconcile.

Malinowski adds: ‘Choosing a fly-by-night supplier could be a recipe for disaster. There are what I call safer options, even if they are not the cheapest available. It could be a reasonable offer from an alternative big supplier or a competitive tariff from an established mid-tier provider.’

Low income or vulnerable customers in receipt of the Warm Home Discount – a one-off dis- count of £140 on electricity bills only – should also choose a supplier signed up to this scheme.

Suppliers offering the discount can be found at gov.uk/the-warmhome-discount-scheme. It includes challengers such as Utility Warehouse, First Utility, Ovo and Cooperative Energy.