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Energy bills rise as YOU cover cost of bad business

Patrick Christys
Dec 9, 2019


Energy bills are surging yet again, but this time you're literally paying for the failure of failed suppliers.

Smaller firms go bust more regularly than I have hot dinners, and that's really saying something.

And that means customers have to be taken on by other firms...but because of that, it's you picking up the tab.

So far this year, 16 small firms have collapsed since the start of the year leaving the bigger firms to pick up pieces.

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Citizens Advice analysed Ofgem data and found that the cost to consumers of suppliers going bust since June has risen by £83million.

Since June, five suppliers have failed in the past six months, when the estimated cost to consumers was £172million.

Toto Energy, Solarplicity, Cardiff Energy Supply, Eversmart Energy and Uttily Energy all went into administration over summer, affecting millions of customers.

Households aren't cut off if their suppliers goes bust as the regulator Ofgem will move them, and any outstanding credit, to a new one as soon as possible.

But the new firm doesn't have to honour the old deal so many bill payers end up on expensive standard variable tariffs that could be costing them up to £440 a year.

When suppliers fail they leave behind unpaid industry bills, and there can be a cost to the new firm to protect the customer's outstanding credit.

These costs are likely to be pushed onto bill payers, argues Citizens Advice.

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And the charity is now warning that energy bills could rise again as it predicts more suppliers going bust in the near future, after failing to make £19million of industry payments (Renewables Obligation and Capacity Market).

Gillian Guy, chief executive of Citizens Advice, said: "Ofgem has proposed measures to limit the costs to consumers, but more action is needed.

"The next government should legislate to compel suppliers to make industry payments - in particular the Renewable Obligation (RO) - more regularly.

"This would stop suppliers from building up such high levels of debt and stop consumers from being the ones to foot the bill."

A spokesperson for Energy UK, an industry trade body, added: "It is unfair for customers to have to keep picking up the tab when energy companies with unsustainable business models go bust.

"So we welcome tougher checks from the regulator to make sure energy companies are acting responsibly and offering not only attractive prices but also high standards of customer service."

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On the unpaid Renewable Obligation payments, Ofgem spokesperson told The Sun: "Any non-payment will be mutualised and the Electricity Settlements Company (ESC) will enforce non-payment through the courts."

Research by Which? found that more than 250,000 Brits were hit by price hikes after their energy suppliers went bust.

Now, homeowners without smart meters face a massive energy bill hike too, a minister has warned.

We previously reported how not having one of the devices installed could already be costing you £250 a year.

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