The energy supply market is shrinking rapidly as providers go out of business. The closure of smaller suppliers is also affecting companies that automatically convert homes to the best available gas and electricity deals.
My family recently became one of the millions of homes an energy supplier shut down when People’s Energy went down. It is one of ten companies — along with Hub Energy, PFP Energy, MoneyPlus Energy, Utility Point, Green, Avro Energy, Enstroga, Igloo and Symbio — that have been closed since August.
Now I have a more expensive energy deal left that I didn’t expect when I signed up for auto-switching website Look After My Bills (LAMB) in 2019.
The Let Down: Mark Schoffman Turns Into Suppliers That Have Screwed Up, Leaving Him With Higher Bills
LAMB is one of several switching services that use your energy usage data and fancy algorithms to save you time and money by automatically switching your supplier when cheap deals become available.
The website had a strong reputation after attracting a record £120,000 endorsement from entrepreneurs on the BBC show Dragons Den in 2018. A year later, it was acquired by comparison website GoCompare in a £12.5million deal.
But now it has taken me twice to energy companies that have since collapsed.
Auto-switch worked well… to get started
I was pleased with my first auto-switch in April 2019, when I saved the equivalent of £113.64 per year by switching from Tonic Energy to Scottish Power. The deal was due to expire in May 2020, but a month before it ended, LAMB found me a new deal with smaller supplier Simplicity Energy, saving me £218.65 annually.
Unfortunately, the company wasn’t enough for my family to be a full-fledged benefit. Simplicity collapsed in January this year.
If a provider fails, energy regulator Offgame has a supplier of last resort plan to manage gas and electricity supplies. This gives some comfort, but you’ll still have to check the meter reading and download your latest bill to check that your new supplier isn’t cheating you.
It’s extra hassle, especially when you thought that an auto-switching service would take away all the administration. Simplicity’s customers were taken over by British Gas Evolve and LAMB’s customer service assured me, when I complained, that ‘your next switch would be to a reputable and financially stable supplier with good customer service ratings’.
When I was transferred to People’s Energy in March 2021 it provided reassurance – with the promise of £80 annual savings. But after the collapse of People’s Energy last month, my family was back at the supplier of the last resort plan.
British Gas has taken over People’s Energy contracts, so my energy supply is assured, but my bills will go up. The standing charge and unit rates I now use to calculate my bills are higher than what I’m paying with People’s Energy. Calculations from comparison website Energy Helpline show that the average medium-sized household like mine, with two adults and two children, would typically pay £904 a year for gas and electricity at the My Old People Energy fixed rate tariff.
However, the British Gas People tariff that has been transferred to me is £370 more expensive at £1,274 a year. Suddenly, I’m paying over £300 extra for my energy despite signing up with an auto-switching service to save money on my bills.
…but then the options began to dry up
LAMB halted its auto-switching service a few days ago, saying it would return ‘as soon as we can find the right energy deals for you’. This leaves me, and many other families, with a more expensive contract than before – and we have no choice but to arrange for our own Switch if we want to get a better deal.
This comes as suppliers are raising tariffs due to rising bulk gas prices and rising demand.
Additionally, the offgame price limit for default energy deals – the rates customers pay after the contract expires – increased this month from a record £139 to £1,277 a year.
Energy Helpline warns that there are currently no fixed tariffs cheaper than this price range, making it difficult to find a competitive low-cost deal that locks in a decent and predictable monthly payment.
To make matters worse, I don’t even have an auto-switching service to help me anymore. Gareth Kloet, director of partnerships at GoCompare, says that many failed energy suppliers weren’t doing badly — they were dismayed by the level of regulatory offgame and price ranges that made it difficult for them to compete.
He says: ‘The failure of these companies is a symptom of an energy market facing rising wholesale prices, regulators not supporting them, and not having large financial reserves.’
Will the energy market strengthen?
The auto-switching and energy comparison markets are now under immense pressure. Rival auto-switching website Flipper exited in August due to adverse market conditions. Another provider, Labrador, is currently advising customers to stick with their current supplier, while Switchcraft says it’s switching only a few due to the limited number of deals available. The market is expected to remain calm. Both Labrador and Switchcraft have turned customers into suppliers that have failed in recent weeks.
Labrador CEO Jane Lucy says it’s important to give customers the option to switch to smaller challengers if they’re cheaper, as long as there’s no risk of losing supplies or credit to their account. She adds: ‘To help customers make informed choices, we regularly publish information on suppliers who may be in financial difficulty.’
Switchcraft founder Andrew Long says there is legitimacy in working with smaller suppliers that offer the best prices and better customer service. He adds: ‘Till a few weeks ago, we didn’t have a situation where we…