Economy Energy ceases trading: what now for customers?
The announcement follows news at the start of the week that Ofgem had banned the supplier from requesting one-off payments and increasing direct debits from customers, following a decline in its customer service standards, complaints handling processes, and billing and payment procedures.
Customers will be protected by Ofgem’s safety net. That means their energy supply will continue and prepayment meters can be topped up as normal. The outstanding credit balances of domestic customers will be protected while Ofgem finds a new supplier to take on Economy Energy’s customers.
Ofgem said Economy Energy’s customers should not switch to another energy supplier and should take a meter reading ready for the new supplier.
Philippa Pickford, Ofgem’s director for future retail markets, said: “Our message to energy customers with Economy Energy is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.
“Ofgem will now choose a new supplier for you, ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.
“We have seen a number of supplier failures over the last year and our safety net procedures are working as they should to protect customers.”
Rik Smith, energy expert at uSwitch.com, said: “Unfortunately, Economy Energy didn’t get the basics right when it came to customer service, billing and payments, so when market conditions got tougher it didn’t have the solid foundations on which to continue trading.
“The expansion of the retail energy market has provided households with fantastic choice thanks to strong competition which has kept prices lower. But, to minimise the risk of further disruption to consumers, Ofgem should look at how existing suppliers can improve before they’re placed in special measures. This should happen alongside its review of conditions for allowing new energy companies into the market. Economy Energy’s quarter of a million customers will have their credit balances protected and the regulator will find a new supplier for them, at which point they should shop around to find a deal they’re comfortable with.”
For more, see Energy firms go bust: should I leave my small supplier?