Energy Supplier Failures: Every Collapse and What Happened to Customers

When an energy supplier goes out of business because of financial problems, the households it serves do not lose their gas and electricity. Ofgem's guidance is unambiguous: "you will still have electricity and gas supplied to your home or business. Your energy supply will not be cut off."¹ A new supplier is appointed for you automatically, and the whole process can take up to 14 days¹. You do not need to do anything to start it, and you are not locked in afterwards: you can switch to another supplier without paying any exit fees¹.

The mechanism is called the Supplier of Last Resort process, and it is the reason the wave of energy company failures in 2021 and 2022 did not leave homes without power. It has real limits, though. Your fixed tariff does not necessarily survive the transfer, complaints against the dead company largely die with it, and the cost of rescuing failed suppliers' customers is spread across everyone else's bills. This page explains how the process works, what happens to your money, and where the safety net stops.

What actually happens when a supplier goes bust

The first thing that happens is administrative, not physical. When a supplier ceases trading, an administrator is chosen to run the company, under arrangements known as an Energy Supply Administration Order¹. The special administrator runs the company until one of three things happens: it is rescued, for example through restructuring; it is sold; or its customers are moved to other suppliers¹.

In parallel, Ofgem begins the process of finding a new supplier for the failed company's customers. The regulator's own advice to households is that there is nothing to do at the outset: "You do not need to do anything. We will choose a new supplier for you."¹ The same continuity principle applies to ordinary switching: if your current supplier goes out of business, you are moved automatically and your energy supply is not interrupted⁵.

For most households the experience is a period of waiting, a letter or email from a company whose name they did not choose, and a new account. The more consequential parts are financial: what tariff you land on, what happens to money you are owed, and what happens to money you owe. Those are covered in detail below, and each has rules attached that are worth knowing before the event rather than after it.

How Ofgem picks the company that takes over

Ofgem's stated purpose in appointing a Supplier of Last Resort is "to ensure consumers of the failed supplier have a continuous supply of gas and electricity"². The appointment is made by Ofgem itself², and the choice is not arbitrary: the regulator runs a bidding process, in which energy companies bid to take on the failed supplier's customers¹.

The bidding process matters for households because it determines who ends up holding their account, and the winning bidder takes on obligations along with the customers. In the past, all Suppliers of Last Resort have committed to honouring the credit balances of customers who were owed money by the failed supplier². That commitment has been consistent, but it is described as what has happened in the past rather than an absolute guarantee, so keeping records of your balance is sensible.

The appointed supplier does not take on everything, however. It "does not have an obligation to take on complaints about the supplier in administration as it was not involved in the events that gave rise to the complaint"². The Energy Ombudsman likewise "will not consider disputes against a supplier that has ceased trading"². The new company takes on your supply and, in practice, your credit; it does not take on the old company's arguments.

Your energy keeps flowing throughout

This is the single most important reassurance in the whole process, and it is worth stating plainly because fear of disconnection is what most people feel first. Ofgem's guidance is that if your supplier goes out of business because of financial problems, "you will still have electricity and gas supplied to your home or business. Your energy supply will not be cut off."¹

The reason is structural. Your supplier is a billing and customer-service company, not the physical infrastructure. The electricity cables and gas pipes that reach your home are operated by network companies, which are separate regulated businesses and are not affected by your supplier's failure. The Supplier of Last Resort process simply swaps which company sends you bills for the energy that continues to arrive.

The transfer itself can take up to 14 days¹, and during that window nothing changes at the meter or the appliance. Households that were already in the process of switching when the failure happened are also protected: "If you were already in the process of switching, you will still move to the supplier you chose."¹ A supplier's collapse does not cancel a switch that is already under way.

Your tariff, your credit balance and your debts

Three financial questions dominate most people's concerns, and each has a different answer.

Your tariff. There is no guarantee your fixed tariff carries over. When a fixed-term contract ends and you have not chosen a new one, you can be put on a default tariff⁶, and customers transferred after a failure are typically moved onto the new supplier's own terms. Default tariffs are not a niche problem: in 2018 the Department for Business determined that bills should be capped following findings from the Competition and Markets Authority that 70% of customers of the six largest energy firms were on default tariffs⁷. The practical consequence is that the price you were paying can change on transfer, which is why the right to switch away without exit fees matters so much.

Your credit balance. If you were in credit, the news has generally been good: in the past, all Suppliers of Last Resort have committed to honouring credit balances of customers owed money by the failed supplier². In an ordinary switch, the same principle applies, with the old supplier refunding any credit in your final bill, and compensation possible if it does not⁸. You can contact your supplier to claim credit back at any time⁸.

Your debts. Money you owe does not vanish with the company. If you owed money to your old supplier and had been in debt for less than 28 days, the amount should be added to your final bill⁵. The new supplier will review your current payments and debt repayments⁹, and if you are struggling to pay you can ask for a payment plan, a payment break or reduction, a review of payments and debt repayments, and access to hardship funds⁹.

One point of consumer confusion is worth flagging. Ofgem's research found that only a net 57% of consumers could correctly identify that exit fees may still apply to a fixed contract even when moving to another deal with the same supplier¹⁰. After a supplier failure the position is different: no exit fees apply to leaving the appointed supplier¹. But in ordinary switching, exit fees can apply if you were on a fixed rate tariff and chose to leave before it ended⁵.

Prepayment meters, Warm Home Discount and switches in progress

Prepayment customers have particular stakes in a supplier failure, because topping up, emergency credit and support schemes all run through the supplier relationship.

The Warm Home Discount scheme primarily provides support through £150 energy bill rebates, funded through a levy on all domestic bills³. If your supplier fails, the rebate does not disappear, but the route to it changes with the new supplier. During the Energy Price Guarantee period, the discount was applied automatically by the supplier for prepayment meter customers on variable contracts¹¹, which shows the pattern: support that flows through the supplier depends on the supplier being able to deliver it.

The protection of prepayment and vulnerable customers has not always held in practice. Ofgem's 2025 decision on supplier compliance with price cap requirements for customers on restricted meters recorded that OVO Energy had overcharged 2,372 customers, and EDF Energy had overcharged 3¹². On the remedial side, EDF committed in September 2023 to reduce the standing charge down to pre-crisis levels for approximately 250,000 customers who received the Warm Home Discount the previous year¹³.

For households mid-switch when a failure happens, the rule is straightforward: you will still move to the supplier you chose¹. The failure of the outgoing company does not unwind a switch already in progress, and if the company you were moving to were itself to fail, the same Supplier of Last Resort process would apply to its customers, with supply continuing throughout.

First steps: meter readings and setting up your account

Once the new supplier contacts you, a short list of practical steps settles your account correctly.

1. Keep a record of it to make sure you are billed correctly by the new supplier."¹
2. Wait for the new supplier to make contact. It will set up your account and tell you your new tariff and payment arrangements.
3. Check your credit or debt position. Have your final bills and payment records to hand so any balance transferred can be verified.
4. Decide whether to stay or switch. You can switch away without exit fees¹, and a standard switch must be completed within five working days⁵, a timescale echoed in consumer guidance that a switch takes up to five working days and your new supplier will give you a date¹⁴.

Smart meters change the practical picture. Older SMETS1 meters could temporarily go "dumb" and lose their ability to send automatic meter readings after you switch energy supplier¹⁵, which is exactly why a manual reading remains worth taking. If you have separate suppliers for gas and electricity, you will need to book individual appointments with both, and it is recommended that you change your electricity meters first¹⁶. If you suspect an issue with your smart meter, or your supplier identifies one, they should promptly investigate it, resolve it themselves or with third parties, and keep you informed¹⁷.

The cost of supplier failures: who pays in the end

Supplier failures are not free, and the bill does not fall only on the failed company's owners. The costs of honouring credit balances, of buying energy for transferred customers, and of running the administration process feed back into the system, and the system's costs are recovered from domestic bills. The Warm Home Discount itself illustrates the mechanism: £150 rebates are "funded through a levy on all domestic bills"³, and the consultation on its cost recovery drew responses from individuals, energy suppliers, consumer groups, charities and industry bodies³.

The wider backdrop is one of mounting household debt. Consumer debt to energy and water companies totalled £7.2bn in March 2025⁴, a figure reported as the Public Accounts Committee criticised regulators, including Ofgem, for failing to do enough for vulnerable people⁴. When suppliers fail, the arrears of their customers become part of this wider picture, and the costs of managing them are ultimately shared across the customer base rather than absorbed by anyone else.

The lesson for households is that supplier failure is a system-level event with system-level costs. Your supply is protected, but the price of that protection is distributed, and the distribution lands on bills. That is a further argument for the independence measures discussed at the end of this page: the less a household depends on any single supplier's survival, the less exposed it is to the next wave of failures.

Where the switch process fails

The Supplier of Last Resort process guarantees continuity of supply, but it has gaps that households should understand in advance.

• Complaints largely die with the company. The Energy Ombudsman "will not consider disputes against a supplier that has ceased trading"², and once a company ceases trading no new dispute cases can be opened against it, though prior disputes are sometimes upheld by the new nominated supplier¹⁸. The appointed supplier has no obligation to take on complaints about the company in administration².
• Some complaints can still be pursued. If you had already complained, you can discuss it with your new supplier, which "will review the complaint and check it is still relevant or whether it can be closed"¹. If you had a case open with the Energy Ombudsman, they will contact you to discuss next steps¹. Disputes about late, incorrect or missing bills, back billing, overcharging, faulty meters, poor service or refused refunds normally go to your supplier first¹⁹.
• Evidence requirements are strict. The Ombudsman's dispute process for a former supplier, for example Foxglove Energy, now trading as Outfox Energy, requires that you have already complained to the supplier, have sufficient evidence including the date the complaint was raised, and that the supplier name matches the account holder's bill²¹.
• Supplier conduct has not always been sound. Ofgem's 2022 review of how suppliers support customers in vulnerable situations identified five suppliers with severe concerns: Good Energy, Outfox, SO Energy, Tru Energy and one other, and a second group with moderate weaknesses including E (Gas & Electricity), Ecotricity and Shell²². A separate record of late levelisation submissions lists many suppliers that later failed or exited, including Bulb Energy, Economy Energy Trading, Eversmart Energy, Future Energy Utilities, Iresa Limited, Together Energy and others²³.
• Consumer understanding is patchy. Only a net 57% of consumers could identify that exit fees may still apply to a fixed contract even when moving to another deal with the same supplier¹⁰, which suggests many households misunderstand the terms that govern them at exactly the moment a failure occurs.

If a complaint to your new supplier is unresolved after eight weeks, you can pursue dispute resolution through the Energy Ombudsman². More detail on that route is on our page about complaining about an energy supplier.

Outside the scope: heat networks, Green Deal and Northern Ireland

The Supplier of Last Resort safety net has hard edges, and three of them matter.

Northern Ireland is outside the process entirely. The standard approach applies to both gas and electricity suppliers to residential users in the UK, excluding Northern Ireland², where the energy market is separate. Northern Ireland's geography also shapes its exposure: not all areas are connected to the gas network, with urban and suburban areas tending to be well served while many rural and western parts have limited or no access²⁴. Households there may instead rely on home heating oil, for which a Northern Ireland support scheme exists²⁵. Our page on energy suppliers in Northern Ireland covers that market.

Heat networks are not covered. The SoLR process does not apply to heat networks². Unlike gas and electricity, heat networks do not currently have an official regulator in Great Britain²⁶, and households that get their heat delivered through a heat network are not covered by Ofgem: gas supply to a network is regulated as a commercial supply, but heat supply to homes is not²⁷. In Northern Ireland, both consumer protection and regulation of heat networks are devolved to the Northern Ireland Assembly²⁶. If your heat comes through a communal system, a supplier failure leaves you outside the safety net that protects gas and electricity customers; see heat network suppliers.

Green Deal is excluded too. The SoLR process does not apply to Green Deal², the government's former home improvement financing scheme, which was not available in Northern Ireland²⁸ and which heating businesses have seen fail as a policy²⁹. Green Deal information is also excluded from certain property assessment data³⁰. If a Green Deal charge sits on your property's electricity meter, a supplier failure does not trigger the protections described on this page for that element of your bill.

Supplier collapse and household energy self reliance

The Supplier of Last Resort process is a genuine protection, and it has worked: supplies have continued, credit balances have been honoured, and no household has had to find a new energy source in a hurry. But it is worth being clear about what it is. It protects your access to the market, not your independence from it. When a supplier fails, you are moved from one company you did not choose to another company you did not choose, on a tariff you did not pick, and the cost of the whole exercise is spread across the bills of every household in the system.

The dependence that remains is real. You still depend on the physical network, on the appointed supplier's competence, on the market's willingness to bid for your custom, and on the regulatory machinery working within its 14-day window. The £7.2bn of consumer debt to energy and water companies recorded in March 2025⁴ is a reminder that the system as a whole is carrying strain, and strain in the system eventually reaches bills.

That is the case for reducing what your household buys from that system in the first place. Every unit of energy a home generates, stores or avoids using through efficiency is a unit for which no supplier's survival matters. The full picture of how supplier choice interacts with self-sufficiency is on our page about energy suppliers and household energy independence, and the wider landscape of who supplies what is in our guide to UK energy suppliers.