In short, if this happens, Ofgem will appoint a new supplier — referred to as the Supplier of Last Resort, or SoLR — for the affected customers. This new supplier will be vetted by Ofgem and appointed as quickly as possible to ensure that customers don’t experience any disruption in their gas and/or electricity service.
You should take meter readings as soon as you're aware that your supplier has ceased trading, as you'll need these for your new supplier.
No, your energy won’t be cut off at any point in the event your supplier goes out of business.
Your new supplier will honour any credit you had built up with your old supplier under Ofgem's SoLR rules. It takes time for your account and your balance to transfer, so if you want to switch away from the appointed supplier, it is best to wait until your account with it is set up.
Ofgem says that its top priority in choosing the SoLR is “to ensure that all customers continue to receive supplies of gas and/or electricity.”
There are several requirements that the supplier must meet but, essentially, the supplier must show it has the ability to take on the new customers quickly and efficiently, and without significantly impacting their existing customers.
The Supplier of Last Resort must also show it has the means and ability to secure enough gas and electricity to supply these new customers without significant cost to those customers. Ofgem will also take into account whether a supplier will voluntarily reimburse any customers’ credit balances when selecting the SoLR.
If no such supplier volunteers to accept the customers of a failed supplier, Ofgem will appoint the supplier it deems best suited to the job.
Ofgem will review the profile of the existing customers of the failed supplier to determine which supplier is best positioned to take them on, taking into consideration things like:
The supplier’s ability to handle issuing bills without delay
Its call centre capability
Whether it will voluntarily reimburse any customers’ credit balances.
In one of the best-known examples, Bulb ceased trading in November 2021 with over a million customers eventually transferred to Octopus.
There is no requirement to stay with a Supplier of Last Resort but it's best to wait until your account is set up with the new supplier before you switch. Once Ofgem has appointed the new supplier, this supplier will take on the task of informing the customers of the change. This notice will also explain that customers are free to compare all energy suppliers and switch to a better plan at this time (assuming plans are available).
Ofgem will appoint a supplier that offers the best possible deal for customers. However, it is not guaranteed that the new tariff will be the same as your old one so your bill could go up. Your new tariff will not have any exit fees so once you have been appointed a new supplier and your account is set up, you can compare prices and switch if you're not satisfied and there is a suitable option to switch to.
Unfortunately, the fixed rate contract you were on will end at the time you’re moved onto the Supplier of Last Resort. You will be placed on a standard variable tariff with the new supplier. However, this tariff won't have any early exit fee, which means you're free to find and switch to a new plan whenever you wish without incurring a penalty.
Your energy debt will not transfer to your new supplier. However, according to Ofgem, you may still need to continue to pay it off to the old supplier, even if they have gone out of business. The administrator will contact you in due course about the money you owe.
It depends how far along in the switch you are - if it's been completed, you would be transferred to the SoLR for the supplier you'd decided to switch to. If it hasn't, you'll go to the SoLR for the supplier you were in the process of leaving. To reiterate, though, your energy supply won't be affected.
Just like credit customers, customers with prepayment meters are protected by the safety net. Prepayment credit balances are already protected - any money which has been loaded onto their meter can be used as normal. As a priority, their new supplier will send them any new keys or other equipment needed to top up their meter and they should continue to use this as before.
If people need to top up their meter before they get their new key they should contact their new supplier. The Supplier of Last Resort will understand the particular difficulties associated with supplying PPM customers, and will have already proven to Ofgem to have robust systems in place to help them as quickly and efficiently as possible.
If you receive the Warm Home Discount, your new supplier should honour this too.