Millions of customers of bankrupt energy companies are automatically switched to a new supplier and eagerly awaiting to see how their bills will be affected.

– What happens when my energy supplier goes bankrupt?

When an energy company goes bankrupt, it is up to the regulator Ofgem to choose a new company to take care of its customers. The process is known as the “Provider of Last Resort” (SoLR).

Customers are unable to choose their new supplier, Ofgem choosing a company that it deems capable of supplying additional customers “as soon as possible”.

The watchdog’s safety net ensures that customers’ energy supply will not be interrupted and any credit balances will be protected.

– Do I have to do something?

No. The best advice is to sit back and wait for your new provider to contact you to avoid problems with the change and protect any credit balances you have accumulated.

You should, however, take a meter reading as it will be useful – but not essential – when your new supplier contacts you.

It’s also a good idea to download or capture the latest energy bills, current charge and credit amounts, and annual usage. A bankrupt business‘s website can go offline, so it’s a good idea to put this information together as quickly as possible.

Those who already have a transition to a new business underway will continue to be moved.

– Do I have to cancel my direct debit?

Ofgem says customers can cancel their direct debit if they wish. You can set up a new direct debit with your new supplier.

– Will I have a different contract with my new supplier?

Yes. Your contract with your old company will end and your new supplier will offer you a special “deemed” contract – one you did not choose. This contract will last as long as you want.

– Will my bills go up?

Ofgem says it will “try to get the best deal possible for you if you are in this situation,” but warns that reputable contracts can cost more because the supplier takes more risk. For example, they might have to purchase additional wholesale power in the short term for new customers, so they charge more to compensate.

However, reputable contracts tend to be capped, and the current surge in wholesale prices means companies are not currently offering any deals cheaper than this for new customers, so you are unlikely to save money by switching.

– When can I change the company or transaction of my choice?

Once the new vendor takes over, customers are free to shop and can move elsewhere – or downgrade to a cheaper rate with the same vendor – without having to pay an exit fee.

– Do companies want all these new customers?

Accepting new customers can be very expensive. The new supplier must not only pay staff to manage the process, but they must also pre-purchase the energy that the new customers are supposed to use, up to a year in advance.

By some calculations, it costs around £ 1,000 for each new household they take.

It also presents an administrative puzzle. Most of the time, the computer system of the failing supplier is not compatible with that of the new supplier, which means that the details of thousands of customers may have to be entered manually.

– What if all the suppliers refused to take on new customers?

Ofgem tries to find a volunteer supplier to take care of the clients of the bankrupt company. But technically that could force any supplier in the market to accept them.

The regulator will avoid this as much as it can, because in the worst-case scenario, the shock of overcharges could bankrupt the new supplier, or make it more difficult to continue serving its existing customers.

If no supplier of last resort can be found, Ofgem can turn to the Special Administration Regime.

Although it has never been used before, it allows Ofgem or the Commercial Secretary to appoint an administrator to run the bankrupt business until it can be sold, rescued, or its customers transferred elsewhere. .

This business may receive grants or loans from the government to enable it to keep the lights on for its customers.