8 energy suppliers set to go bust - what to do if your provider is affected

Kwasi Kwarteng has said more than EIGHT energy suppliers could go bust this year with the Business Secretary vowing the government will not bail out 'badly run' firms.

He said: "Generally over the last three or four years we've had five to eight companies exit the market for whatever reason.

"Some of them have been badly run, some of them have had liquidity difficulties, so this is something that happens a lot.

"This year the number will probably exceed the normal five to eight companies that exit.

"We have to anticipate more failures given the high wholesale price, but we've got mechanisms in place."

He added: "It's always a sad thing when companies do have to exit the market, or leave or fail.

"But I don't want taxpayers money to be propping up badly run companies, I don't think that makes any sense. We can't reward failure."

Here's what to do if your energy supplier goes bust, those companies currently in trouble and why gas prices have significantly increased in 2021.

Why has the price of gas increased?

The price of gas has increased significantly in 2021 due to high global demand a shortage in supply.

Wholesale prices for gas has increased by 250% since January and risen 70% since August, according to industry group Oil & Gas UK.

The increase in costs has been blamed on planned maintenance, a temporary reduction in nuclear power station outage and less renewable energy output.

At the moment, companies are shouldering that financial burden due to the government's energy price cap which limits the cost firms can pass on to its customers.

Yet the cap is set to rise by £139 a year, from £1,138 to £1,277 a year, starting from 1 October 2021 and will be reviewed again by Ofgem in six months’ time.

Which energy companies have gone bust?

Five energy firms have gone bust in recent weeks brought on by the rise in wholesale gas prices coupled with the energy price cap.

Utility Point and People’s Energy went bust on 14 September, a week after PFP Energy and MoneyPlus Energy, and a month after HUB Energy.

New suppliers have been found for all five firms to have gone bust, with industry regulations ensuring energy supply will continue for affected customers.

Is the government going to step in?

While it is an uncertain time for the industry and many households across the UK, there is seemingly no immediate concern among the government.

Government has been in talks with representatives from the energy industry to understand the widespread impact the rise in gas prices is having on households and businesses.

Business secretary Kwasi Kwarteng said the government won't bail out "failed companies" and stated the energy price cap, "which saves 15 million households up to £100 a year", will remain.

Speaking in the House of Commons on Monday 20 September 2021, Mr Kwarteng said Britain has a “diverse range of gas supply sources”.

He said: “We have sufficient capacity, and more than sufficient capacity, to meet demand and we do not expect supply emergencies to occur this winter.

“There is absolutely no question of the lights going out or people being unable to heat their homes. There will be no three-day working weeks or a throwback to the 1970s.

“Such thinking is alarmist, unhelpful and completely misguided.”

What should I do if my energy supplier goes bust?

Households will not be without energy.

If your energy supplier goes bust you will still receive gas and electricity under rules put in place by energy regulator Ofgem.

Your account will be transferred to another energy provider but be warned that you may be placed on a more expensive tariff initially.

It is recommended that you take a note - or photograph - of your meter reading as soon as possible while you wait for the new supplier to make contact.

All money is protected so any credit you had with your previous supplier will be paid back. Equally, if you were in debt then that will still need to be paid back.

Citizens Advice says there is no need to cancel a direct debit straight away and recommends waiting for your new account to be set up with the new supplier before cancelling or changing.