Small suppliers are coming out of the market at an alarming rate, with 11 companies going bankrupt since the beginning of 2018
Millions of energy customers who switched to start-up companies to protect themselves against costly bills now pay the price for their leap forward.
Small suppliers are coming out of the market at an alarming rate, with 11 companies going bankrupt since the beginning of 2018.
Exclusive industry analysis shows that nine of these companies together owed customers £ 113 million when they collapsed, of which £ 26 million for customers who had already switched to a new supplier.
But despite promises that their cash would be protected and would be reimbursed by their new supplier, customers are still waiting months for refunds.
In the meantime, Money Mail has been bombarded with stories about terrible service from other small suppliers who are still active.
Today, after handing over a file of dozens of reader complaints to the sector watchdog Ofgem, we can reveal the extent of financial havoc and emotional misery caused by decades of loose regulation of the energy market:
- Complaints to the Energy Ombudsman are huge, with small suppliers now accounting for a quarter of all complaints about companies.
- Companies that are about to collapse hold on to the assets of customers and ignore requests for refunds.
- Experts predict that between five and ten other suppliers will cease trading this year.
- Customers are still waiting to get their money back six months after their energy company went bankrupt.
- Suppliers send nonsense invoices and use tactics for collecting debts.
- Customer-oriented customer service drives customers back to the Big Six suppliers and eliminates people.
WHY DO MANY SMALL SUPPLIERS GO GOOD?
A quarter of all households now get their gas and electricity from a small or medium-sized energy company, many of whom are tempted by a flood of cheap deals on comparison websites that can be hundreds of pounds cheaper than those offered by the Big Six suppliers.
Even today the 20 cheapest deals are available with little known names such as Outfox The Market, Utility Point, Lumo Energy, Powershop and Avro Energy.
Angry call: Peter Coombes, pictured with wife Margaret, moved to Toto Energy. Almost immediately the company increased its combined payments from £ 93 to £ 140 per month
Despite the loss of 11 suppliers, there are still more than 60 providers to choose from.
But Mark Todd, co-founder of Energyhelpline switching service, says: & # 39; The rising costs of wholesale gas and electricity, the ease with which suppliers can get licenses and intense competition, will lead to between five and ten more suppliers going bankrupt are going this year. & # 39;
In the wake of the growing chaos in the energy sector, Ofgem announced a shock last week for its rules for starting suppliers.
From June, new energy suppliers entering the market will have to pass tougher checks before they are granted a permit.
Incredibly, newcomers can buy a so-called & # 39; supplier in a box & # 39; package from an IT provider – and give them all the tools they need to start delivering energy, including a license.
The companies act as catalysts and sign customers and buy the gas and electricity they need from the wholesale markets.
When the price of wholesale gas and electricity rose sharply last year, it hit a number of companies hard.
Some small suppliers buy electricity in the short term instead of buying these years in advance. If prices rise suddenly, but companies have offered their customers low, fixed rates for two years, they may struggle to earn enough money to pay for the power and go bankrupt.
According to the analysis of collapsed suppliers by an industry insider, a signal is that a provider is in trouble, increased complaints about large credit balances that build up on customer accounts and long delays in repaying the money.
THREATING DEBT LETTERS
Patricia Low, 79, from Suffolk, has been waiting for a refund of £ 147 since October.
Patricia was an Extra Energy customer before switching to Green Network Energy for a new deal. She received her last bill stating that she had the honor.
When the money didn't show up, she tried calling the company, but couldn't get through. The company had gone bankrupt.
In December, Scottish Power took over 108,000 Extra Energy domestic customers and promised to repay any assets, but Patricia is still waiting.
The retired reporter for the Lowestoft Journal says: “When I saw that they owed me money, I thought," Oh good thing I can buy Christmas presents with that. " But it's April now and I still haven't received anything. & # 39;
Geoffrey Dryland, left, is waiting for Ovo to repay a £ 460 credit that he had accumulated with Economy Energy. Patricia Low, correctly, has been waiting for a refund of £ 147 since October
At the time of the collapse of Extra Energy in November, the Energy Ombudsman had received 1,160 complaints about the company in the past 12 months. It says that the caseload is still growing.
Complaints website Resolver says it also receives around 50 letters and emails per week about the company's collection practices, conducted by the PriceWaterhouseCooper (PWC) administrator.
Hundreds of former account holders and members of the public who had never been a customer feared that they were the target of scammers when they received letters in which they collected letters from PWC.
Angry recipients wrote to Money Mail explaining that they did not owe the company money.
A PWC spokesperson confirmed that the letters were genuine. It adds that it is aware of a limited number of cases where people have already paid or disputed the outstanding amount and have apologized for the confusion.
Scottish Power says it realizes that it has taken too long to give final bills and to return customers' credit and has apologized.
STILL WAITING AT £ 500 BACK
Brian and Vivienne Clarke from Somerset are still waiting for £ 500 back from Economy Energy after it collapsed in January.
Ovo Energy was appointed to take over the 235,000 customers of Economy Energy and has promised to repay all credits due to all involved.
The do & # 39; s and don & # 39; ts
- Don't panic if your supplier goes bankrupt. Ofgem will appoint a new supplier within about a week.
- Take a meter reading and sit down. Your offer will not be interrupted and Ofgem promises to protect your credit balances that you have with the company.
- Ask your new supplier to put you on their cheapest deal as soon as they contact you.
- Do not assume that this is the best deal available. Compare it with others on the market.
- Do not switch to a supplier only because it has the lowest price. Check the customer service classifications of Citizens Advice energy suppliers.
- Read reviews of corporate customer service on social media pages & view websites.
- Choose a switching service that both assesses companies and offers price offers, such as energyhelpline.com.
- Do not choose a company that does not have a customer service telephone number.
But since the Clarkes account was transferred to Ovo, Economy Energy has received another two £ 146 monthly payments.
When Brian received his first bill from Ovo this month, he said that his monthly payments would increase to £ 188 and that he had the £ 500 credit he had built up or one of the two monthly payments he had made since Economy Energy stopped trading could not see. .
He has been told that Economy Energy must send a final bill to Ovo before he will see his money again.
The 76-year-old retired coach-driver says: & The system does not work. The regulator says you don't have to worry, you are transferred to a new supplier and your money is safe. But after they have chosen the new supplier, they do not ensure that the process works properly. You are told to sit tight and wait. & # 39;
When the company collapsed, the Energy Ombudsman investigated 1300 cases of dissatisfaction – one of the highest monthly complaint levels it has seen outside of Big Six suppliers.
Former pilot Geoffrey Dryland and his wife Gillian, a retired teacher, both 74, are waiting for Ovo to repay a £ 460 credit they had built up with Economy Energy.
Geoffrey, from Staffordshire, who suffered a stroke last April, says his experience with both suppliers was very shocking from start to finish. & # 39; This whole situation has upset me so much. I lost all that money. & # 39;
Because Money Mail has contacted Ovo, it has agreed to repay the pair.
An Ovo spokesperson says it is committed to complying with all credit balances. Economy Energy customers should receive final bills in the coming weeks.
RETURN TO THE GREAT SIX
Gillian Guy, chief executive of charity Citizens Advice, says that long waiting times for repayments, difficulties with switching and debt practices where companies fail have led to a large number of public calls.
Regulator Ofgem acknowledges that in some cases it may take longer than expected for new suppliers to reimburse customers due to delays caused by inadequate registration by the failed supplier.
However, it is expected of the new supplier that he works hard to manage the transfer and is ready to solve any problems.
Frustrated readers have also told Money Mail how they are struggling to get their money back from small suppliers who are still taking on new customers.
Some are tired of it, they are starting to leave the minnows for the so-called Big Six suppliers: British Gas, Eon, EDF Energy, Npower, Scottish Power and SSE.
Although the number of people switching from energy suppliers in general has increased, 59,134 customers deactivated small and medium-sized companies for a Big Six company in February, compared to 45,383 last month, figures from Energy UK show.
Some readers are so tired of it, they are starting to leave the minnows for the so-called Big Six suppliers: British Gas, Eon, EDF Energy, Npower, Scottish Power and SSE
Martyn James, from Resolver complaint site, says: & # 39; One of the major tragedies that has come from the spectacularly horrible customer service of a number of smaller energy suppliers is that it can get people off switching. & # 39;
Peter Coombes, 76, from Bournemouth, says he will never switch to a small supplier again. He moved to Toto Energy in October 2017 when a comparison site told him he could save £ 288 a year on his combined gas and electricity bill.
Almost immediately the company increased its combined payments from £ 93 to £ 140 per month.
Peter sent in his measurements every few months, but it was often told, via an automated e-mail, that his account could not be found.
Peter decided to switch to major supplier Eon. When he received his last bill in November, he discovered that he had received £ 382 credit and was told he would receive it in 28 days.
After hearing nothing from the company in January, he contacted the Ombudsman and finally Toto agreed in March to give him his money back and £ 30 for his problems.
He received a total of £ 412.44 and closed his account, but forgot to cancel his authorization. A week later, Toto took back the £ 412.44.
Peter says: & I called them, gave them a piece of my mind and they gave me my money back two days later. I would never switch to a small supplier again. & # 39;
A spokesperson for Toto says: & # 39; We have close contacts with the Ombudsman and in our most recent meeting they noted that the increase in complaints was reversed. & # 39;
NEW RULES FOR BETTER SERVICE
Under the new rules of Ofgem, companies must prove that they can offer good customer service. This includes accurate invoicing and an efficient telephone and e-mail service.
Last year, almost two thirds of all complaints about small suppliers were received regarding invoicing, the Energy Ombudsman said.
Switching complaints represented 12 percent of complaints, customer service 9 percent and payments and debts 6 percent.
Last word – page 52