Over the past years, there has been a growth in the number of suppliers in the domestic energy market and some increase in the commercial sector which has brought greater range and choice for customers. However, over the last year, there have been many new entrants leaving the market.
Should we be worried about this new trend for failing smaller suppliers and should smaller suppliers be avoided?
What has been happening?
This year those leaving the market have been primarily due to them having insufficient funds to manage their business effectively, but there has also been a case where Ofgem has revoked a licence because they have failed to meet their licence requirements.
These suppliers have mostly been domestic supply businesses, and their customers have been placed with another supplier. But it is understandable that this can cause a sense of the market being unstable.
Ofgem predicted last month that more of the smaller providers are likely to go bust or merge as a result of the competitive energy marketplace.
SSE has also announced that they are selling their domestic energy supply business to OVO Energy which will make OVO Energy the second largest energy supplier. Other suppliers, such as Npower are also divesting their interests to focus on a particular element of the energy industry.
What is Ofgem doing?
Ofgem tries to protect the customers of those suppliers that have gone under, and they find a new supplier for them. Ofgem is also trying to future protect the market by introducing more stringent tests to check the financial health of any new suppliers wanting to enter the market.
Ofgem is introducing these new reforms to help stem the rising number of failures in new entrants and drive up standards. Any new entrants would have to prove they have enough funding for the first year and provide plans of how they will meet customers service obligations.
How can you avoid being supplied by a company that goes bust?
There are never any guarantees, but most of the failing suppliers have been in the domestic, not the commercial market. However, choosing the right energy supplier is important not just for stability reasons.
When times are tight, and there is a drive for cost-cutting, it can be tempting to choose an energy supplier on price alone or allow that to be the key driver. Whilst price is important it is essential to ensure that the chosen supplier meets other key criteria such as good customer service, accurate billing, satisfactory payment terms (without unreasonable late payment fees) and the ability to provide renewable/green energy (if required).
At Enerteq, we will give you access to our leading business energy procurement platform which puts you in control of your energy. Through it, you can access all the UK energy providers and it enables you to tender your supply to the market in minutes. You can then compare bids from all the suppliers to find the best deal for you from a choice of fixed and flexible contracts.
Because we are independent, we can offer you impartial advice, and we will present you with a range of options but ultimately the decision is yours to choose. We won’t walk away after the deal is done, we will also be there to offer support and help you throughout your energy contract if you want it.
We can also offer bill validation and invoice analysis as energy bills can be complex and onerous to review and query, which is why our expert eye and knowledge can streamline the process for you and can often deliver significant savings.
Contact Enerteq today on 01423 815299 or click the button below and we’ll be happy to offer some advice.