Keep calm . . . and stay on the grid
As two more gas and electricity providers fold, don’t fear a power failure. Here’s how you can:
TWO gas and electricity suppliers have just gone bust, putting a spotlight on how customers fare when energy providers hit trouble.
Iresa is the latest household provider to fold, just a day after business supplier National Gas and Power had its licence revoked.
Earlier this year, The Mail on Sunday warned that a number of small suppliers were on the brink. Now the chief executive of the supplier taking over from Iresa is warning that cheaply run energy firms still pose a risk to customers.
Here, we explain what customers need to know – and do – in the wake of Iresa’s demise.
WHAT HAS HAPPENED?
BACK in March energy regulator Ofgem banned Iresa from recruiting new customers until it got its ‘house in order’ and resolved its disastrous customer service issues.
In February customers who paid regular sums by direct debit had one-off charges taken from their bank accounts ‘to recover debt’.
One contacted Citizens Advice after receiving a £1,000 demand for payment.
Many others have overpaid and are now owed money by Iresa.
Complaints went unanswered and when The Mail on Sunday tried to call the supplier it found itself 110th in the queue.
Ofgem’s ban was originally meant to last for up to three months. But it had to be extended as Iresa still could not handle the workload from existing customers. Now Iresa has ceased trading altogether.
WHAT HAPPENS NEXT?
OCTOPUS Energy will take on Iresa’s customers. When a supplier goes bust Ofgem appoints a rival to rescue abandoned accounts, known as a ‘supplier of last resort’.
Hudson Energy will take on customers of National Gas and Power.
Octopus Energy will continue contacting Iresa’s customers this week. No one’s supply will be interrupted under Ofgem’s ‘safety net’ rules.
The boss of Octopus has begged for patience over the next fortnight as it is ‘working with poor quality information’ from Iresa.
Chief executive Greg Jackson told The Mail on Sunday: ‘This is the scariest thing we have done since starting the business because we have a reputation to uphold and this is a case of whether or not we can turn around such a big mess.’
Jackson says his business receives 12 complaints a year on average from the Energy Ombudsman. By contrast Iresa received about 9,000 a year.
Jackson adds: ‘It is now our aim to show tens of thousands of customers who have been through the wringer just how much better an energy company can be.’
WHO IS AFFECTED?
THE 90,000 customers of Iresa and 80 firms served by National Gas and Power are directly affected.
But the news also serves as a reminder to all consumers to pick a provider based on more than just price when switching to save money. Choose one that is both cost effective and robust.
Colin Nicholson, 49, a sub-editor at The Mail on Sunday is an Iresa customer. He says: ‘I always thought it did not matter if my supplier went bust as I would probably owe it money. But after Iresa took a oneoff payment in March I am now in credit.’
Jackson warns there are still suppliers offering ‘break-even or below cost energy’ to new customers. These deals come with a ‘sting in the tail’, because it will either lead to a price rise or the firm going bust.
SHOULD IRESA CUSTOMERS SWITCH?
NO. TAKE a meter reading and wait until you have a new account with Octopus.
The transfer should be complete around August 21. Once the new accounts are in place, customers can switch again, without penalty. If a switch was under way before Iresa ceased trading, this will still go ahead with any credit repaid.
Those with a smart meter may find it returns to ‘traditional’ mode, which means taking manual readings. Octopus uses a Secure brand smart meter and customers with those can use them as normal.
WILL IRESA CUSTOMERS END UP PAYING MORE?
OFGEM says customers will not lose any credit built from overpayments. But customers of a failed supplier face paying more as they are shunted on to a ‘deemed contract’. The higher costs reflect the extra risk the new supplier is taking on.
Iresa marketed itself as a cheap supplier and undercut rivals significantly, so any new contract is likely to be more expensive.
Customers will be moved to the ‘Flexible Octopus’ tariff, which the supplier says is cheaper than those offered by the Big Six suppliers. A typical customer will pay £955 a year.
I’M NOT WITH IRESA. SHOULD I DO ANYTHING?
IT ALWAYS pays to consider switching. Compare tariffs – from your own supplier as well as rivals. Check if you will have to pay an exit penalty. Good price comparison websites will take this into account when showing savings. Millions of households pay over the odds. Others are with companies offering poor service. One of the Big Six suppliers, British Gas, recently revealed it lost 270,000 customers in the first six months of this year. But Thomas Rogers, co-founder of transfer service Switchd, warns against picking on price alone. He says: ‘The choice is simple. Do you want cheap energy with good customer service or expensive energy with poor service?’ He recommends looking at review websites, but adds: ‘Companies rarely go bust and if they do your energy will not be interrupted.’
WHERE SWITCHERS CAN FIND HELP
COMPARISON websites accredited by Ofgem for upholding certain standards – including how they find and present deals – include TheEnergyShop, uSwitch and the energyhelpline, which you can also call on 0800 0740745.
Companies that will move you to a cheaper deal with you only having to sign up once include Switchd, Labrador and Flipper.
Review websites include Trustpilot, while consumer groups MoneySavingExpert and Which? publish tables on customer satisfaction. For more help on switching generally, visit citizensadvice.org. uk/consumer/energy or call their helpline on 03454 040506.