14th energy supplier ceases trading since November 2016
More than 3 years of volatile electricity markets has seen 14 of the smaller energy suppliers go under. Hot on the heals of Solarplicity last month, Eversmart Energy are the latest energy company to cease trading.
What happens when an energy supplier stops trading?
As usual, customers of these suppliers will receive gas and electricity as usual. The standard advice from Ofgem in these situations, is to do nothing initially, other than take a meter reading. It is a good idea to take a photo of the meter that includes both the reading and the serial number.
Meanwhile, Ofgem will be busy arranging for a new supplier to take on all the Eversmart Energy customers. Suppliers tender bids to Ofgem which include the prices they will move Eversmart Energy customer onto. These will be variable rates. They will also honour any credit balances.
In this instance, Ofgem appointed Utility Energy to take on Eversmart Energy customers.
Once supplies move to Utility Energy, customers are advised to give them another meter reading. You can then either choose a fixed term contract they offer you, or move to a supplier of your choice.
Why are so many energy suppliers going bust?
There have been an unprecedented number of energy companies going bust in the last couple of years. These include:
|Supplier ceased trading||Supplier appointed by Ofgem|
|Cardiff Energy Supply||SSE|
|Economy Energy||Ovo Energy|
|Eversmart Energy||Utilita Energy|
|Extra Energy||Scottish Power|
|Iresa Energy||Octopus Energy|
|National Gas & Power||Hudson Energy|
|One Select||Together Energy|
|Our Power||Utilita Energy|
|Spark Energy||Ovo Energy|
|Usio Energy||First Utility (now Shell Energy)|
These energy suppliers have gone bust for a variety of reasons, which all come back to funding.
Some will have had minimal funding in the first place. Many of these companies were set up just as the electricity markets became volatile. Unfortunately they were not in a position to absorb rising costs, be it wholesale prices, distribution charges or taxes and levies.
Larger, more established suppliers, are in a position to absorb some of these costs.
Many suppliers have suffered through lack of planning and development. They were therefore unable to provide a satisfactory level of customer service. Poor response times to complaints, a lack of (or irregular) billing and long waiting times when customers called in.
These problems would lead to a host of complaints to Ofgem, which in turn would lead to the imposition of fines by the energy regulator. Then it comes back to the lack of funding and an inability to absorb such costs.
Tougher tests for new entrants
As a result of these recent failures, Ofgem has drawn up rigorous tests for new entrants to prove their mettle. Only then will they be given a supplier licence.
These tests will include:
- Prove they have sufficient funding for at least the first year
- How they will comply with regulatory obligations in the energy market
- Explain how they will provide a fit and proper level of customer service
There may also be checks on directors and major shareholders.
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