UK energy crisis: are bills going up and should I switch to a bigger supplier? | Energy bills

Five energy companies have gone out of business in the past two weeks, and as suppliers are already comparing recent events to the 2008 financial crisis, households could be in for a choppy ride.

What will happen to the energy bill?

It seems like they only go one way and that is up. The price cap of Ofgems that the maximum suppliers can charge to customers on their standard variable rates, would already increase by 12% on October 1 to 1,277 per year for average (dual fuel) consumption. Households using prepayment meters, typically the most vulnerable customers, will see average utility bills rise to 1,309 per year.

Analysts warn that the cap could rise to between 1,440 and 1,500 in the spring of 2022 if wholesale gas prices continue to rise. The limit is set every six months after an evaluation. In the unlikely event Ofgem suspends its price cap this week, gas and electricity bills will rise alarmingly, said Joe Malinowski, who The energy store.

I have a smaller supplier. What happens if it goes bankrupt?

Experts warn there will be a tsunami of corporate bankruptcy unless government intervenes, and smaller companies are more likely to go under while larger companies take over their customers.

When a supplier fails, Ofgem has a process to automatically assign customers to a supplier of last resort so you don’t get cut off. However, depending on your current rate, you could see your bills rise significantly, some as much as 40% (see below).

Utility Point’s customers, who dropped out earlier this month, have all switched to EDF. On Monday, customers of Peoples Energy, another bankrupt company, were told they were being transferred to British Gas.

Be sure to include meter readings whenever you are notified of a change in your delivery.

Will I stay at the same rate as offered by the failed supplier?

New. In previous years, the new supplier sometimes kept to the old company rates, but that will no longer happen. Ofgem has confirmed that the default suppliers can only place the customers they inherit against a price cap.

Customers who had the best fixed income deals nine months ago will see bills rise by as much as 250 a year if their supplier goes bankrupt and they stay with the new supplier chosen for them.

Can I switch and what happens to the credit I have built up?

The supplier you move to will honor any credit you may have built up with your old failed provider. Once you’ve switched to Ofgem’s designated supplier and any balance has been transferred, you can leave at any time without paying an exit fee, although at this point it’s unlikely you’ll find a much better deal. Switching usually takes 14-21 days.

My small supplier is still trading. Should I switch to a larger supplier now?

In theory, there’s nothing stopping you, but it probably makes sense to sit still and see how this plays out, especially if you’re on a cheap rate. It looks like the government will have to put in place some sort of rescue package, so it may be worth the wait.

Are there any cheap offers?

Most suppliers already withdrew their cheapest rates on Friday, but a few more deals are still being advertised. On Monday, a number of companies, including E.ON, offered one-year flat rates of about 1,200 per year for dual fuel. E.ON also has a two-year flat rate, which is only a shade more expensive than the one-year deal, though it may not last long.

The British Gass HomeEnergy Secure tariff has fixed prices until November 2023 and costs about 1,400 per year. This compared to the 1,000 that switching customers paid before this crisis.

Should I get a flat rate deal when the best deals are so expensive?