Tariff hikes ratchet up fuel bills

More than 280,000 customers have been shifted on to expensive energy deals after their supplier went bust in the past year.

Consumer champion Which? found that of 925,000 customers whose supplier failed in the past 18 months, more than a quarter were shifted on to standard variable tariffs – deals which can be among the most unaffordable available.

Firms acting as a Supplier of Last Resort play an important role in keeping gas and electricity supplies running – and they may have to find ways to cover the extra costs they incur because of taking on extra customers.

But the current system fails consumers – leaving them not knowing whether Ofgem will move them on to one of the cheapest or most expensive deals on the market when their supplier goes to the wall.

Brilliant Energy and Northumbria Energy’s 17,000 customers were moved on to SSE’S standard variable tariff, which at £1,253 a year was £1 less than the maximum permitted by the price cap.

At Economy Energy, 235,000 customers were moved on to standard variable tariffs via the Supplier of Last Resort process with Ovo Energy.

Its customers would either have been put on to the Ovo simpler standard variable tariff which was at the level of the price cap at £1,137 a year, moving to £5 below the new price cap level at £1,249 a year in April.

Or if they had prepayment meters they would have moved to Boost’s tariff in January at £1,134 a year.

After Our Power collapsed, 31,000 prepay customers went on to Utilita’s Smart Energy variable deal at £1,240 – £2 less per year than the prepayment meter price cap.