Why you should NEVER switch immediately if your energy supplier goes bust – and the exact time you should

BRITS have been warned not to switch energy firms right away if their supplier goes bust as they could find it harder to get their money back.

Five providers have already gone under this year and more could follow after a huge rise in wholesale gas costs.

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Green and Avro Energy are the latest energy firm to exit the market and the sixth biggest energy company Bulb has asked for more money to keep going.

More companies could go bust in the coming weeks, the government has warned, and another smaller provider, Igloo, is also on the brink.

If your energy supplier fails you won’t be cut off, and the energy regulator Ofgem will find you a new supplier.

Customers affected are advised to wait until they are contacted by the new company to switch, or they could face a longer wait to get back any money they are owed.

Anyone who has built up a credit balance when paying their energy bill will have their cash protected when they are moved by Ofgem.

But if you switch before a new account is set up with this new supplier you could face a longer wait for the cash.

Citizen’s Advice has warned on its website: “Don’t switch tariff or supplier until your account is moved to the new supplier.

“You might find it harder to get any money you’re owed if you switch before this happens.”

Anyone who does switch before this will still have their credit balance moved to the new supplier Ofgem chooses.

But because they will be getting their energy supplied by a different company, this can make it more difficult to work out how much you’re owed, check your metre readings and give back the cash, Ofgem told The Sun.

While Ofgem moves you over and protects any credit you have, they won’t necessarily move you to the best deal though.

The right moment to switch to a cheaper deal if you can get one is when you first hear from the new supplier appointed by Ofgem.

It means you can get your credit balance sorted sooner rather than later, and you won’t be paying more than you should if the new supplier isn’t offering the best deal.

The exact time it takes to get back credit you’re owed can depend on how many customers are being moved over, but you don’t need to wait until the credit balance has been processed to switch.

Once you’ve been switched over by Ofgem and the new supplier has contacted you then it’s always worth checking that you are on the best deal and switching to a new tariff if you’re not.

What is a credit balance?

An estimated 21million households pay energy bills by direct debit, paying the same amount each month based on estimated use over the entire year.

But actual use can vary through the seasons, as more energy is generally used in winter when the heating is on and less in summer when the weather is warmer.

During the summer months customers can often end up paying more than the energy they use, leaving them with a credit balance with their energy company.

Ofgem estimates that customers had £1.4billion in credit balances in October 2018, the latest figures available – working out as around £65 each.

The regulator announced plans earlier this year to stop this happening with new rules that would see customers who have overpaid refunded automatically in future.

What should I do if my energy supplier goes bust?

Although Ofgem will move you to a new supplier, and your credit balance will be protected, there are still some things you can do to protect yourself.

Households are advised by Ofgem to take a photo of the meter reading.

You’ll be contacted by the new supplier which can take a couple of weeks, Citizens Advice says, and they should let you know how you’ll be paid back.

The organisation also has a handy list of the new suppliers which have taken over the ones which have gone bust.

Customers should also log into their accounts online to check their balance and download any bills.

It’s worth keeping hold of old bills so you can show your payment history and any credit.

Households with direct debits are also advised not to cancel until your new account is set up.

Unfortunately anyone who applied for the Warm Home Discount which gives £140 off bills from a supplier that’s gone bust may not get with their new energy company.

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This post first appeared on thesun.co.uk