Thousands of Energy Customers Hit by Price Hikes After Suppliers Went Bust

Over a quarter of a million energy customers have seen their energy bills go up over the last 18 months after their supplier went bust, according to Which?.

Research from the consumer group revealed that 283,000 customers were switched onto expensive standard variable tariffs after their energy supplier had gone out of business in 2018. Over the last 18 months, ten energy suppliers have gone out of business in the UK, affecting around 925,000 households.

Which? said that the current system of energy suppliers taking on failed firms’ customers is failing consumers as they are ‘facing a lottery’ to see if they will be put on the cheapest or most expensive energy deals on the market. Currently, when an energy supplier goes bust, the industry regulator Ofgem is tasked with finding a new supplier to take over the failed supplier’s customers. But while some see little change in their energy bills, others have faced huge price hikes.

The report revealed that some 17,000 customers from Brilliant Energy and Northumbria Energy were transferred onto SSE’s standard variable tariff, with consumers facing price hikes of 38% on average. On the other hand, some energy suppliers such as Octopus Energy moved consumers onto their cheapest tariffs when they took over a failed supplier’s customers.

“It’s wrong that energy customers face a lottery when their supplier goes bust – and that those who have followed advice to do their research and shop around for a better deal can be hit with such substantial price hikes,” said Natalie Hitchins, head of home products and services at Which?. “Ofgem must ensure its new checks are sufficiently robust to bring an end to this cycle of supplier failures, and alongside government should explore ways to lessen the financial burden and make the process easier for consumers when energy firms collapse.

“For now, switching is still the best way to get a good deal and better service, so anyone unhappy with the service they are receiving or the price they are paying should check the results of our energy customer satisfaction survey and find a better-rated supplier. They could save around £300 a year.”

A spokesperson for Ofgem said: “If a supplier fails, under our safety net we find a competitive deal for customers when appointing a new supplier. Around half of the customers from failed suppliers in the last 18 months have been transferred by their new supplier on to tariffs cheaper than their standard variable rate. In two instances, the new supplier’s tariff were the same price as the failed supplier’s.

“Appointed suppliers have to send welcome packs to customers with details of the new tariff they will be put on. Customers can ask to be moved onto a different tariff or shop around and switch to save money. No customers are charged exit fees if they decide to switch to another supplier.”