Find out what support is available this winter and what to do if your energy supplier collapses. 4 Minute Read.
Sector support available for vulnerable households amid winter energy crisis.
At the start of what may become a very challenging winter for both consumers and suppliers, brought about by the collapse of a plethora of energy companies coinciding with the end of Covid-19 pandemic support schemes and the beginning of cold weather, consumers may be confused about where to get help with energy problems. Energy UK is running a winter campaign to raise awareness of the support available to consumers from energy suppliers and the Government.
Energy supplier failures
A difficult time under normal circumstances is compounded with the failure of 25 UK energy suppliers so far in 2021; the majority of these companies failed after September when the wholesale price of gas surged. This has now affected over 2 million people in the UK and could rise to 4 million as another supplier, Bulb, enters special administration.
Bulb is Britain’s 7th largest energy supplier with 1.7 million clients. Teneo has been appointed as the special administrator that will take over the day-to-day operations of the company without affecting supply. This differs to other failed companies such as Neon Energy who have entered a Supplier of Last Resort process which sees Ofgem direct a gas or electricity firm to take on a failed supplier’s customers. The list of firms taking over failed suppliers is found here.
What to do if your supplier goes bust?
Customers will be switched to a new supplier with no disruption to service. You should take a meter reading and wait for your new supplier to get in touch. Customers are protected by the energy ‘price cap’ and any credit on a customer’s account will be honoured by the new supplier. Similarly, the cost of energy used but not billed will still be charged to the account and customers on prepayment meters will still be able to top up without loss of supply and any credit on a prepayment meter can be continued to be used as previously.
Customers that are paying back debt should wait for their new supplier or administrator to contact them and explain how to proceed.
Ofgem advises people not to cancel their direct debits with the failed supplier as the existing direct debit will be transferred to the replacement supplier, thus protecting any credit balance on the account. If the direct debit is cancelled it may cause delay in setting up the new arrangement.
Furthermore, the failed supplier may continue to operate under special administration, as is the case with Bulb, and the customer will continue to be billed as previously. Customers who have already cancelled their direct debit should wait until the new supplier has made contact with them to give help on setting up a new customer account and advise how an existing credit balance will be dealt with.
Advice for customers on the Warm Home Discount Scheme depends on the terms agreed by Ofgem with the new supplier. For those in the core group (recipients of the Guarantee credit element of Pension credit), the Department of Work and Pensions will be writing to customers with information by Mid-December. Those in the broader group (low income and meet the supplier’s criteria) will need to reapply for the discount.
Finally, customers with a Smart Export Guarantee tariff will need to agree a new SEG tariff with the new supplier.
New support available for 2021.
Energy UK Vulnerability Commitment was published to support customers in vulnerable circumstances and to pledge support in different ways.
The commitments are published on the Energy UK website and include:
Voluntary Winter Commitments
Energy suppliers are making commitments to support customers over the coming winter months. The commitments build on the emergency measures all suppliers agreed with the Government in response to Covid-19 to help identify and prioritise customers at risk.
Energy UK have stated that:
“Suppliers have provided hundreds of millions of pounds of financial support to customers during this period – with Ofgem stating that as many as a million customers a month have been on repayment plans or payment holidays, while emergency credit of up to £50 was used 1.5 million times by prepayment customers in both November and December last year.”
The commitments are as follows:
What existing support is available?
The Price Cap
This is the amount suppliers can charge customers on a standard variable tariff or default tariff. This is currently set at £1,277 for the average household. This limits the price a supplier can charge per kWh of electricity and gas, not the total bill cost. The cap is updated twice a year and increased in October by £139. This is expected to further increase in April 2022 as the collapse of many UK energy suppliers will have an effect on the metric that is calculating the current period leading up to February 2022. Some reports suggest an increase in the price cap of up to 30% according to analysts.
Warm Home Discount Scheme– A one-off payment of £140 towards energy bills.
Winter Fuel Payment- For those born on or before 26 September 1955 you could get between £100 and £300 to help you pay your heating bills.
Household Support Fund- Replacing Department of Work and Pensions and Defra grants, £500m is being made available to local councils to distribute payments to those that are vulnerable to help pay for utilities and clothing.
Cold Weather Payment- Those receiving certain benefits will be eligible for a payment of £25 for each day 7 day period of very cold weather between 1 November 2021 and 31 March 2022. The payment will be made if the average temperature in the local area is recorded as, or forecast to be, zero degrees celsius or below over 7 consecutive days.
Priority Services Register
All supplies are not required to maintain a register of customers who, for non-financial reasons, may be in a vulnerable situation. They are entitled to free non-financial services to address needs relating to communications, safety or access to energy. This includes requesting their bill in braille for example. Customers should contact their supplier if they wish to be added to the PSR.
Energy Companies Obligation
Vulnerable customers whether homeowners or renting can apply for support from this scheme which is designed to help make UK homes more energy efficient by funding insulation and installation of new appliances. All suppliers with over 150,000 customers are obligated to deliver this scheme.
Available in England and Wales, this scheme allows up to 60 days respite from collection actions to reduce stress and allow time for customers to deal with debts. This support is only accessible through a debt advisor or an approved mental health professional.
Supplier standards of conduct
Click here to view the Good Practice Guide which explains how energy companies can further support customers this winter.
You should contact your supplier if you are worried about bills or need support. To increase accessibility and in accordance with the Vulnerability Commitment, you can now contact suppliers through a free phone number or via new methods such as live webchat, Twitter or WhatsApp.
Big thanks to Energy UK for hosting a very helpful webinar with Citizens Advice to help raise awareness to the support available for households during this tough winter period.
For further advice on managing debt over the coming months please view our monthly advice column.
Luca Difato, Operational Team Support Administrator & Communications Assistant. 30th November 2021.