Energy regulator Ofgem raised its energy price cap to £1,277 on October 1 (except in Northern Ireland), which means your energy bills have probably already grown. Find out your next steps if your supplier has gone bust and what you can do to help keep your energy costs down.
Why are energy prices rising?
The price rise has been caused by an increase in wholesale gas prices (the amount that energy firms pay), which have seen a steep rise since October 2021. Gas prices have hit a record high as the world emerges from lockdown as well time as other economic factors having an impact.
This means that changes in wholesale prices are passed on to households through rising energy bills.
The energy price cap only affects you if you live in England, Wales or Scotland.
In Northern Ireland, energy prices are governed by the Utility Regulator. You can find out more about the help available with paying your energy bills on the Consumer Council website.
What happens if my energy supplier goes out of business?
While it’s rare for a big energy supplier to go bust, lots of small energy companies have gone bust over the past few months.
If this happens, the ‘Ofgem safety net’ makes sure you aren’t left without energy. The safety net moves you automatically to a new energy supplier, onto a new deal.
If your energy supplier has stopped trading, it’s important to sit tight, don’t switch and wait until your new provider contacts you. Your new supplier will be chosen by Ofgem, which can take several weeks. This process could take longer if you were with a larger supplier like Bulb, but they should still be in touch to keep you updated.
Find out more about what you can do as a Bulb customer on the Ofgem site (Opens in a new window)
If you’re already in the process of switching, your switch will still go through.
Make sure you take a meter reading so that you’re ready for when your new supplier contacts you.
It’s also worth keeping old energy bills and waiting until your new supplier is appointed before cancelling any Direct Debits.
Find out more about what you can do if your account is in debt or in credit when your supplier goes bust on the Citizens Advice website (Opens in a new window)
What if I owe money or am in credit and my supplier goes bust?
Any credit on your account will be protected. The balance is transferred to your new supplier, who will pay you any outstanding credit – minus any energy you have used but not been billed for.
It’s important you don’t switch tariff or supplier until your account is moved to the new supplier. You might find it harder to get any money you’re owed if you switch before this happens.
If you owe money and your supplier goes bust, your debt will be transferred to the new provider and you’ll still have to pay.
Find out more on how you’re protected and what you need to do as a customer (Opens in a new window) on the Ofgem website
Should I switch suppliers for a cheaper deal?
If your fixed deal has come to an end or you’ve been moved to a new supplier, it’s tempting to look for a new energy company where you can make savings. Unfortunately, no fixed deals are being offered for less than the energy price cap at the moment, so you won’t cut your bills by switching.
Beware of switching
Energy prices are currently very high. Many people are looking to find a cheaper deal, however, it’s likely your supplier’s standard default tariff rate set at the energy price cap by regulator Ofgem will be the cheapest rate available.
This means the average household in England, Wales and Scotland will pay no more than £1,277 a year (£1,309 if you’re on a prepayment tariff) on your gas and electricity provider’s default (also called standard variable) tariff.
Bear in mind you could pay more or less than this if your energy use is greater or lower.
If you’re currently on a fixed-rate tariff, you’ll be moved to your provider’s standard variable tariff when the fixed term ends. At the moment there are no new fixed-rate energy tariffs cheaper than the energy price cap.
The energy cap is due to be reviewed again in April 2022, so you’ll need to be ready to review what you’re paying again to see if it’s time to switch.
We don’t know how much the price cap will go up by in April 2022 yet, but experts have predicted it’ll rise by £600 a year.
Need someone to talk to about your finances?
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Find out more about the support you can get in our guide Make sure you’re getting the right entitlements
How can I save money on my energy bills?
Simple things like making sure you unplug phone chargers, not leaving things on standby and using energy efficient light bulbs are the first steps. Remember, if you use more, you’ll pay more.
You can also improve the energy efficiency of your home with double glazing and insulation.