Would you switch to a smaller energy provider?

Ofgem were wrong to allow so many entrants into the energy marker without them demonstrating financial resilience. There were over 60 at one count. I believe some of this were opportunists, taking money out of the business before it failed in inappropriate ways. Some were no doubt naive. Some are run by local authorities, providing them with bail outs, by people who do not have business acumen; they, too, would have otherwise gone broke.

Some fail because their fixed price deals become unsupportable when wholesale costs rise beyond what was envisaged, and the company does not have the resources to buy energy ahead to protect against that.

Unfortunately, suggesting that “consumers must not be made to shoulder the costs for these failures.” would leave the deprived customers with their account credits lost; a failed supplier will not return those. So all consumers will pay through their energy bills.

Ofgem some while ago were changing the terms of licensing new entrants so hopefully this problem will go into decline. It does not seem possible to deal with the present incumbents; there will, no doubt, be a process of natural selection but at cost to us all.

So, is Ofgem fit to to their job? As you say, we all contribute to the cost of failure. I hope that Ofgem is monitoring the performance of all companies in the market to look for signs of potential trouble.

Which? has rightly been critical of larger energy suppliers for poor service. It’s well established that some companies have allowed some customers to build up large credit balances. I have had this problem with Scottish Power and e.on, and judging by comments on various Convos this is not uncommon. I wonder why Ofgem has not stepped in to put an end to this practice.

I’m very grateful that we do have regulators but perhaps their effectiveness needs to be assessed.

Maybe the regulators need a …..regulator? They act on behalf the government and presumably are scrutinised by select committees.

“Ofgem is the Office of Gas and Electricity Markets. We are a non-ministerial government department and an independent National Regulatory Authority, recognised by EU Directives. Our principal objective when carrying out our functions is to protect the interests of existing and future electricity and gas consumers………

The Authority’s powers and duties are largely provided for in statute (such as the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002 and the Energy Acts of 2004, 2008, 2010 and 2011) as well as ruling European Community legislation in respect of energy regulation.“

The smaller energy companies rely almost entirely on household customers and do not have the ballast of commercial, industrial and public service customers which provide greater stability for forward procurement and usually have long-term contracts. Household customers are more prone to switching when they see a better price or their existing supplier increases the tariff so there is more volatility at the smaller end of the market. Ofgem should be factoring this into their appraisal process when judging resilience.

When I was with Scottish Power they doubled my direct debit, even though I was well in credit – without even sending an email to tell me. Yes they were easy to phone and I had to do that a few times because they kept pushing up my direct debit when there was no need. I’m not surprised that SP remains near the bottom of the Which? list for customer satisfaction. I had not chosen to become an SP customer but they had been selected as supplier for a collective switching scheme run by the council.

I’m happy with my present supplier and have not had to phone them to complain about anything. They do not keep me well in credit because they would have to pay me interest if they did.

I’m with SP; sent my meter readings in a couple of days ago and the same day they recalculated my account and increased my DD by about 8% (after a reduction earlier in the year) to keep pace with my predicted use. They seem to be on the ball.

I’ve switched suppliers a number of times and SP have always been easy to deal with, helpful on the phone (they have a call back timed service if they are busy) and respond to emails.

You and Derek have had good experiences but mine seems to be in line with the findings of Which?

With my present supplier my balance is £70.12, my projected cost for the month is £56.22 and if I want to decrease my monthly payment from £65 I can do it in less time than it took me to write this. I will alter it when I receive an email saying that the next statement is available. I’m in control and don’t need to contact customer service.

If I become disappointed with my current energy supplier I will consider smaller energy companies, but not before checking to see what Which? and others have to say and checking the company’s annual accounts. I know that customers have not lost out when small companies have gone bust but I would rather not take the risk of being dumped with a company with a poor reputation.

If Ofgem monitors the financial stability of suppliers, perhaps action will be taken before another small company goes bust.

When you select a cheap energy supplier you do take a risk on the sustainability of their business, as we have seen from the clutch of failures over the last 15 months – 10 so far. As most people will have selected them online the switch to another supplier should be easy; you don’t have to take the “supplier of last resort” that agrees to take on the customers but I think it helps with the initial changeover and refund. You can then switch to another chosen supplier.

Which? recently published this:
https://www.which.co.uk/news/2019/04/failed-energy-firms-leave-customers-facing-higher-bills-and-missing-refunds/

I guess Which? Conversation is one of the biggest continuous and regular receptacles of moans with appeals for more added every day.

Perhaps there needs to be a comparison site for comparison sites…

My naive understanding of energy comparison sites was they displayed all, or most, of the available tariffs to save me having to trawl through each supplier separately to establish the best deal. I expect them to make their money by commission. I did not expect them to have their own exclusive deals to offer that beat tariffs direct from the supplier. That is what I would like Which? to comment on.

I agree. If they are going to show ‘exclusive’ deals, or not present the available range of tariffs, then I believe there should be a notice to that effect. The whole business of switching, money-saving and getting the most suitable terms relies on transparency. Ofgem should make that a pre-condition. This shows that the comparison sites and the energy companies are not as independent of each other as the public are led to believe. The comparison sites have forced themselves into the energy market, which is not wrong if customers can get a better deal but it is unfair on people who look to see what their existing supplier can offer if approached directly. Companies doing secret deals with comparison sites is not in the public interest in my view.

As I’ve mentioned before, price comparison sites don’t provide price comparison with collective switching schemes run by councils. I signed up for one of these and it was a good deal. The problem of these schemes is that when you sign up, the energy supplier is unlikely to be known.

We often discuss the benefits of buying British. Since privatisation, our energy industry is increasingly run by other countries. I suggest it might be worth bearing this in mind when choosing an energy supplier and not just when buying fruit & veg.

I’ve come out better so far on one year contracts than if I’d taken out longer ones – I believe. I was surprised my current supplier came out so well. But it had also bothered me that the Which? site gave problem.

I pay monthly direct debit and my supplier has automatically adjusted the dd when appropriate.

I decided to renew for two years. With my supplier I can set my direct debit, whereas when I was with ‘big six’ companies, they set it and I had to ask for it to be reduced because of a large credit balance. They always complied with my requests but it was a nuisance to have to ask.

I’m more concerned about council tax, but that’s a topic for a different Convo.