Power on through energy crisis

STAY SWITCHED ON AND AVOID NASTIEST BILL SHOCKS THIS WINTER

IF your energy supplier has collapsed, don’t panic, you’re not alone. Around 1.5 million households are going through the same experience right now.

Six gas and electricity suppliers have gone bust so far in September, accounting for more than 5% of the market, and more are likely to follow.

A number have stopped taking on new customers, while several comparison sites have stopped highlighting competitive deals because there aren’t enough to choose from.

While regulator Ofgem has found new suppliers for all the affected customers and your heating and lighting should operate exactly as before, this is a worrying time.

Many people who locked into cheap deals, especially fixed-rate tariffs, could find themselves paying hundreds of pounds more for their gas and electricity as a result.

As if that was not bad enough, the energy price cap will increase for the second time this year on Friday, hitting 15 million households on the lowest tariffs.

Here’s how to survive the energy squeeze.

What is happening?

Wholesale gas prices have risen fourfold this year, including a rise of 70% in August alone.

One reason is that Putin-backed Russian supplier Gazprom has restricted gas supplies to Europe and, indirectly, Britain, to seal approval for its new pipeline to Germany, Nord Stream 2.

European supplies were already low, after the recent cold winter.

Planned maintenance of nuclear plants, lower energy from renewable wind sources due to calm weather, and the shift away from “dirty” coal have also hit supply

A fire at one of the UK’s main power import cables in France has made a bad situation even worse.

Meteorologists warn that the UK faces a greater than normal risk of cold winter weather this year, driving up demand for gas and keeping prices high all the way through to 2023.

It all adds up to a perfect storm of problems. And the UK is in the eye of the storm because it is heavily dependent on gas imports from abroad, and has little storage capacity after Centrica closed the Rough facility in 2017.

Home energy bills have soared this year, with regulator Ofgem increasing the energy price cap by £96 in April and another £139 in October, taking the average household’s bill to £1,277 a year. There is worse to come.

With gas shortages likely to intensify when we hit peak winter demand, the price cap could rise by another £300 next April, according to the Centre for Economic and Business Research. That would lift the average bill to £1,600 a year.

Who is going bust?

At the start of the year, around 70 energy firms were supplying gas and electricity to UK customers.

That number is rapidly dwindling, and expected to shrink further as winter looms.

Six energy firms have gone bust this month alone. Avro Energy and Green Supplier are the most recent, closing last week, following Utility Point and People’s Energy, and PFP Energy and MoneyPlus Energy. HUB Energy went bust in August.

Others are turning away new customers, including Symbio, Igloo, Ampower, Utilita and Neo Energy.

The Flipper website, which automatically switches customers to the cheapest deals, closed this week saying it could no longer offer big savings as there were not enough low-cost tariffs to choose from. Gareth Kloet, energy spokesperson for GoCompare Energy, says a combination of today’s record high global gas price and the price cap are forcing energy providers to supply gas and electricity to customers at a financial loss.

Only businesses with very deep pockets can sustain this, Gareth says.

“While the price cap is a good idea in principle, it’s had the negative effect of driving out competition in the market,” he adds.

One reason smaller suppliers are vulnerable is that they failed to buy gas in advance, leaving them at the mercy of today’s soaring prices.

“We expect to see more smaller energy players pay the ultimate price as the weeks go on,” he adds.

Business secretary Kwasi Kwarteng said the Government will refuse to bail out “failed companies” and insisted the energy price cap would remain, as it “saves 15 million households up to £100 a year”.

He denied the UK would face winter supply emergencies, with the lights going out and three-day weeks as happened in the 1970s, during the last energy crisis.

What does it mean for you?

First, don’t panic. You will still be able to heat and light your home, without interruption to supply, because energy regulator Ofgem is arranging for suppliers to take over when rivals fail.

For example, British Gas is the new supplier for People’s Energy, PFP Energy and MoneyPlus Energy domestic accounts.

Octopus Energy has taken over from Avro Energy, EDF Energy has taken on Utility Point customers, E.On now supplies HUB Energy and Shell is the new supplier for Green customers.

If you pay by direct debit and are in credit with your supplier, this should be honoured after you have switched over and you will get your money back.

You should still be able to check how much credit you have by logging into your current supplier’s website, but you must contact your new supplier for a refund.

But there are problems if your supplier goes bust. If you have locked into a competitive fixed-rate contract, or any other cheap deal, you are likely to pay a lot more when you are switched to a new supplier.

They are under no obligation to match your current tariff.

This is on top of rising food and petrol costs, next week’s cut to the £20 Universal Credit and upcoming tax and National Insurance increases. Gillian Cooper, head of energy at Citizens Advice, said the poorest households face a tough winter. “Many people on low incomes risk losing the £140 warm home discount when they’re moved to a new supplier. Some customers in debt may see their agreed repayment plans torn up,” she says. Another problem is that as more suppliers collapse, competition will shrink and force prices up even higher.

What to do now

If your supplier has gone under, hold tight before shopping around for a better deal, says Kevin Mountford, boss of financial services platform Raisin UK. “Wait until you know your new

‘‘ We expect to see more smaller energy players pay the ultimate price

supplier. This way Ofgem can continue to protect any credit you have. Check the transfer progress at ofgem.gov.uk.”

Once you know your supplier you can shop around but it could be harder than before, as comparison sites Go Compare and Compare the Market have removed their comparison function.

Instead, compare energy prices direct, through supplier’s websites.

“Variable tariffs may be cheaper and more plentiful but be warned, your tariff can go up if energy prices continue to rise,” Kevin says.

You should also take a meter reading to give to your new supplier and can cancel your direct debit if you wish.