Please note, this information is from the BBC website, it's not written by Accent.
The price of energy is soaring, but what will that do to our energy charges?
For the smaller companies, it will mean surviving or going bust. Many are reporting being in financial trouble, and some have already gone under, leaving them unable to provide their customers with the energy that they are paying for. But what does that mean for their customers?
If a supplier goes under, the energy regulator Ofgem will make sure all customers affected continue to be supplied and don’t lose any money owed to them. Ofgem will switch customers to a new supplier and whoever that is will have to take on any credit balances a customer may have. In turn, the customer will have to pay any outstanding charges or debt they owe for their supply. Moving the account may take a few weeks. The new supplier should then contact new customers to explain what is happening with their account.
What does all this mean for Me?
If you are switched because your supplier has gone bust, you are recommended to do a few things:
- While you wait to hear from your new supplier, check your current balance and, if possible, make sure you keep your bills. Take a photo of your meter reading.
- If you pay by direct debit, the advice from Citizens Advice is that there is no need to cancel it straight away. Wait until your new account is set up.
- If you are in credit on your account, your money is protected and you'll be paid back. That works both ways. If you were in debt to the old supplier, you'll still have to pay the money back. The new supplier should contact you to arrange a suitable payment plan for paying back any money.
- Once you know who your new supplier is, make sure you're on the best tariff for you. You can switch suppliers if you're not happy without any penalties, but don't do this until your account has been moved over.
How can energy companies go bust?
The bigger energy providers can take out insurance against the risk of a spike in energy prices, but smaller providers can’t easily do so. That’s why some of them haven’t been able to guard against a such a price rise and are going under.
Energy companies are also partly blaming the price cap, so it is likely that Ofgem will review price caps in the future and there will be more higher charges. The price cap is now the cheapest deal in the market and, according to the energy companies, providing new customers with energy at that price means they lose money.
The government is currently talking with energy providers about the crisis. One of the concerns is that customers may end up on more expensive tariffs when they are switched to a new supplier.
The BBC website contains more information and there is also a feature on what to do if you are worried about the higher charges.
Millions of households in England, Wales and Scotland are already facing a 12% rise in their energy bills from October when a higher price cap - the maximum price suppliers can charge customers on a standard tariff - comes into force.
It is still worth shopping around. You can investigate cheaper deals, either with your own supplier or by moving to a rival. Switching to a lower-priced fixed deal could save you hundreds of pounds, but the higher costs of gas in the future will affect millions of us.
If you are worried about these higher charges, and how this might affect how you pay your rent, please contact us and ask for the income team. We are here to help in whichever way we can.