Energy Suppliers, Suppliers of Energy. Gas / Electric

Debit is carried over to the new supplier.

SVR is definitely the cheapest. Even then there’s no margin (based on wholesale prices), may be different if hedged. Reckon we’ll see a very rapid shrinking of the market leaving the big players only before Christmas if things stay as they are. As someone loosely working in the industry the pros at the moment of your supplier going under means you’ve got the best rate around with whoever you go with (but they won’t be happy to have you)!

Apparently costs £300 to take on the account of someone whose unhedged supplier has gone bust. £6 billion if they all fail. Quite big numbers..

Got a mate who works for Ovo. He says bulb and most other providers are basically a ponzi scheme, priced cheap to get new customers in but unsustainable so eventually will have to jack your prices up otherwise when they stop growing they will go bust and take any credit balance you have with them.

He says Ovo are by no means the cheapest but won't rip you off the longer you stay with them.
Also says you will always get a better deal by shopping around every year no matter who you are with. He says the only other supplier he would recommend is Octopus and says they are good.

Is your friend still working for Ovo? Would be interesting to hear his take on things at the moment.

Lots of dodgy facts flying around here. Just to clarify:

In the event of your supplier going bust you are moved automatically to a new supplier by Ofgem. If you are in credit, your money is protected and you'll be paid back. If you were in debt to the old supplier, you'll still have to pay the money back. The new supplier will contact you to arrange a payment. It’s all tightly regulated and will work itself out.

What tariff do you get put on?

https://www.bbc.co.uk/news/business-58090533

If your energy provider collapses, you will not stop receiving gas and electricity.
Your account will be moved to a new supplier by energy regulator Ofgem - although this may take a few weeks.
Unfortunately, you may end up on a more expensive tariff if you are switched to a new supplier.

You’ll usually get out on the standard variable tariff (SVT), which in this market is the cheapest tariff out there at the moment as it’s below margin (even at the new cap of £1300)

I was moved to Scottish Power when Tonik went under and was put onto their Basic Energy V2 tariff.
Like Jameo said your old provider will not just vanish into a black hole, the accounts are transferred or your old one is closed with a final bill etc.

I switched to Octopus after a while because Scottish Power started to push their smart meters aggressively and from the communication style I could sense they were trouble, checking their
reviews online confirmed that. Now I just hope Octopus survives.

Debit is carried over to the new supplier.

Not necessarily ;)

#askmehowIknow

Now I just hope Octopus survives.

.

Just get everyone you know to move to Octopus!

Given the state of the market not sure how much longer they'll offer £100 per switch.

That link again :)
https://share.octopus.energy/wind-clove-763

Why are they collapsing? Is it a regulator fail?

High wholesale prices I get but why are the commercial providers the ones allowed to hold the exposure to that, I'd assumed (presumably wrongly) it's their business to ship the stuff to consumers rather than to hold risk positions.

They’re closer to energy traders than energy companies, is my understanding (which may be wrong of course) and the smaller ones don’t have the resources required to hedge their positions- so when costs exceed the supply price the smaller ones go boom.

= It is, in effect, a financial crash in the energy market brought on by the companies being given free reign to take exposed positions

Why wouldn't they hold the risk? They know what level the energy price cap is set at, so it is there job to hedge the risk that they can secure the supply below that level which many have failed to do. In Bulb's case, there business model is loss making to grow market share so they had no wiggle room to begin with.

It is the fault of the regulator that they allowed companies to take on positions with considerable risk without requirements around exposure levels

Ofgem sets a price cap for a standard variable tariff (SVT) that is the maximum price an energy company can charge the consumer for a standard tariff. Fixed rate tariffs are treated different, so are excluded from this cap.

Energy is a pretty competitive market, with little to really differentiate the providers as the goods delivered are pretty intangible. thus consumers are very price sensitive, and will go for the cheapest option. This used to be a fixed rate (2 year fixed often), that guaranteed the suppliers regular income so they took a loss on energy in test 1, to make margin on year 2 due to hedged energy purchases. However, the current climate means that the cheapest tariff is the variable tariff as the cost of energy has risen to such an extent suppliers are increasing their fixed rate tariffs to maintain margin. As they can’t raise the svt above the price cap, this is now the cheapest tariff in market, and is a loss making one for suppliers.

So it’s partly the regulator not allowing higher costs to be passed on to the consumer and partly the govt protecting the consumer from excessive bills. Normally the price cap works, and is based on the cost of energy + x% to allow suppliers to make money from it but with the 70% increase in wholesale prices since the cap was announced in July it’s no longer valid.

If the price cap was calculated know it would be nearer £1700 vs the £1300 it will be from Oct simply due to August price increases.

Bulb would have been ok with only offering svt as the price cap takes into account a small margin for suppliers. Under normal market conditions they could have weathered the storm of slightly increased costs with their hedge and waited for the next price cap announcement, but with such a rapid increase in costs that’s what’s put them at risk.

Debit is carried over to the new supplier.

I bet they are pretty hot on that. They are less hot if you have credit.

Not necessarily ;)

#askmehowIknow

Heh, nice. I managed to get away without paying for electricity for 3 years at my last house. Despite me contacting the provider numerous times with meter details and readings, I never received a bill more than ~£1 per qtr. We moved out over 2 years ago - any idea how long until I'm clear of them potentially chasing for payment?....

I am not close enough to it but with Bulb, I am not sure the small margin would of been enough as they have a large debt to service due to their rapid growth and customers on fixed tariffs were already loss making but you could be right.

buy fixed, sell floating... seems like a recipe for disaster without a proper hedging strategy

And I thought I did well to get away with three months!

Aah - thanks for the explanation. The cap was a piece of information that I was missing.

However, I'm still surprised that the regulator didn't force them to hold the capital to cope with this. For example, the price rises are significant, but it's not unprecendented (for example, post Fukushima in Japan, gas prices rose 80% or something insane as the nuclear plants were all turned off).

Why wouldn't they hold the risk?

I'd just assumed that regulators wouldn't allow them to given that their role is to supply an essential service, or would insist on them holding sufficient capital. Maybe they do and this is one of those 99.99th percentile events that they can't cope with. Maybe the holding of capital isn't even a thing the energy regulator can insist on - it's not something I know a lot about.

This is one of those once in a decade events, don’t think there’s been a price rise this steep in a very long time from data I’ve seen going back to 2008 ish.

@cozey that’s why many energy companies have very large trading teams to look at exactly that. As @Dammit said earlier there’s very much twin parts, the physical to someone’s home and the engineers needed for that to happen, plus the market trading to make sure they remain viable and can buy energy at a good price to allow them to offer competitive tariffs to consumers

I use to work with a woman who moved into a new build house (small street, 6? houses built by a guy who owned the land they were built on, or similar)
Moved in, contacted energy company, got told her house didn't exist.
Called (and logged contact details) every 3 months, got told the same thing over and over.
She was there for at least 5 years without paying for gas or electric, but I haven't seen her in years to know if they ever did catch up with her.
Can't imagine they would be able to pin years of bills on her, when she tried to pay them several times a year.

I'd just assumed that regulators wouldn't allow them to given that their role is to supply an essential service

Nothing happens to consumers' supplies if the "suppliers" go bust, because the whole thing is fictional, so none of it matters. LOL or whatever.

I've submitted a refund request with Bulb for the credit I had, which they've apparently accepted, though I have a sinking feeling the money will be lost in the ether if they collapse before it gets to my bank account.

Here's the page they send you to when you email them, which I don't think is linked anywhere:
https://account.bulb.co.uk/dashboard/payments-and-statements/refund