Economy Energy collapse – what are your options?
Another small energy supplier has gone bust. Economy Energy is the first supplier to cease trading this year, but the ninth to go bust in the last 12 months, and its collapse will affect around 235,000 households across the UK.
If you’re an Economy Energy customer, here’s what happens next.
If you’re worried your gas and electricity will be cut off, there’s no need to panic as Ofgem’s Safety Net means there’ll be no disruption to your energy supply - you’ll notice no difference even though Economy Energy is no longer providing your power.
Ofgem will now work to allocate your supply to another energy company – when One Select Energy collapsed last year, its customers were transferred over to Together Energy.
What happens to your energy contract now?
All Economy Energy contracts were transferred by Ofgem over to Ovo Energy on Saturday, January 12, and your new supplier should be in touch any day now, if they've not already contacted you. As previously mentioned, if you have any outstanding credit balance, this will be protected.
If you've not already done so, make a note of your latest gas and electricity meter readings, ready for when Ovo Energy contacts you.
Now that a new supplier has been appointed, it's worth running an energy price comparison to see if you can find a cheaper deal elsewhere - remember, you can switch from your new Ovo deal without incurring any penalty fees.
What energy contract will you be switched to?
Ovo Energy has taken over your contract and you will now be on a deemed tariff - this type of tariff typically usually comes with expensive rates, so we recommend you compare deals and switch supplier as soon as possible.
To start an energy comparison, simply enter your postcode in the box at the top of the page.
If you had a prepayment meter, Economy Energy, your energy will now be supplied by Boost, and you'll be switched to Boost’s standard variable PAYG plan. You’ll find full details on your energy rates in our welcome pack, which will be sent soon.
Again, you can switch from this deal without incurring a penalty, so it's definitely worth running a price comparison.
What if you were in credit with Economy Energy?
If you are in credit when your supplier goes bust, Ofgem says your new supplier should pay back any outstanding credit – so, whichever supplier the regulator appoints should provide the refund, and will be in touch to outline how this will work.
This shouldn’t affect when you can switch supplier, and your new supplier should still honour your refund even if you switch before it is paid, but make sure you clarify this before you switch.
The review process may take a few weeks as your new supplier will need to receive and review records from Economy Energy. The money you are owed will be calculated by Economy Energy’s administrators, and any unbilled charges for your supply by One Select will be deducted.
What if you owed money to Economy Energy?
If your account was in debt when Economy Energy went bust, you’ll still have to pay any outstanding balance, and you may even find you’re not allowed to switch supplier until this is paid off. This will be dealt with by the supplier’s administrators, who will contact you directly to arrange repayments.
If you had a Direct Debit set up with Economy Energy, this will automatically be moved to your new supplier. If you cancelled your direct debit when you heard Economy Energy was going bust, your new supplier will be in touch to help you set up a new account.
What if you were already switching from Economy Energy?
If you were already in the process of switching from Economy Energy when it went bust, your switch will go through as normal.
If you have recently switched from Economy Energy, you may still be contacted by the supplier Ofgem subsequently appoints. When Iresa Energy went bust, a glitch in the system meant some customers who left months before the collapse were still contacted and told they’d be switched to Octopus. So please do be patient.
Why did Economy Energy go bust?
There are a number of reasons why an energy company goes to the wall, but it’s often the financial strain of rising wholesale costs and government renewable energy targets that sees firms struggle. Energy companies are already voicing their concerns over the introduction of the price cap, as there is a danger it could essentially see them priced out of the market.
For other suppliers, it’s poor customer service that is their undoing, this was the case with One Select, the last energy firm to go under, and it seems to be the catalyst for this latest collapse – just last week, Economy Energy was banned from taking on any new customers until it improved its customer service levels.
Ofgem decided to take action against the supplier following complaints of declining standards of customer service, inefficient complaints procedures and billing and payment processes. One notable example of Economy Energy’s slipping standards was when customers on fixed rate deals were hit with a £300 price increase.
There also seems to have been some stange dealings going on at Economy Energy just before its collapse, as it agreed to sell around 30,000 of its customers to E in December 2018, but failed to notify Ofgem about it when the company stopped trading.
While it looks into the details of this deal, Ofgem has issued a provisional order “to prevent further harm and uncertainty” being experienced by former customers of Economy Energy, which will remain in place for three months, during which time E must stop the switch of the customers and write to Ofgem about what steps it has taken.
This issue of this order doesb't imply the regulator has found conclusive evidence of a breach at this stage.
If you were owed compenesation from Economy Energy, Ovo will not be taking on responsibility for these payments and you'll have to contact Economy Energy’s administrators to discuss the matter. We'll post their details as soon as we have them.
Although there have been a number of high profile energy company collapses during the last few months, don’t be put you switching to a smaller supplier, but make sure you choose carefully – although cutting costs will almost always be the biggest incentive to switch, the cheapest option isn’t always best option.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.