What happens if my energy supplier goes bust?

Two things matter most in those first days. First, take a meter reading, so there is a clear record of what you had used when the failure happened. Second, wait for Ofgem and the new supplier to contact you, rather than acting on calls or messages from anyone else. Your credit balance is protected by Ofgem's rules, and any complaint you had open with the Energy Ombudsman will still be handled¹.

The first moments of a failure: what changes and what does not

The immediate practical change is administrative, not physical. The wires and pipes into your home are run by network companies, not your supplier, so nothing about the physical supply changes hands. What ends is your relationship with the company that billed you. Ofgem's guidance is blunt on the main point: "You do not need to do anything if your current supplier goes out of business. We'll automatically move you to a new supplier, and make sure your energy supply is not interrupted"⁴.

If you had a complaint or case open with the Energy Ombudsman at the time of the failure, it does not vanish. The Ombudsman will contact you to discuss next steps¹. Consumer advice bodies such as National Energy Action publish checklists covering what to do when a supplier goes out of business, which set out the full sequence of steps in one place⁵.

For a household thinking about energy independence, a supplier failure is a reminder of one dependence that is hard to escape: the billing relationship. Even homes with solar panels and battery storage normally remain tied to a supplier for imports and exports. The safety net protects your supply, but it does not let you choose who takes over, at least not at first.

Ofgem's safety net and the Supplier of Last Resort

When an energy supplier ceases trading, Ofgem appoints another supplier to take on its customers, to prevent a drop in service. This appointed company is called the Supplier of Last Resort⁶. The transfer is automatic: you are switched to the new supplier without asking, and your supply continues uninterrupted throughout⁷.

The safety net applies to both fuels. Whether you have electricity only, gas only, or both, the protection is the same: your supply continues, and any credit balance is protected⁸. If you had already started a switch to a new provider before the failure, that process is handled as part of the transfer rather than left in limbo⁸.

There is no gap in supply at any point. Independent guides are unanimous on this: your energy will not be cut off at any stage of the process³. The main thing you lose is choice, temporarily. You cannot pick which supplier rescues your account, and you cannot negotiate the terms you arrive on. That is the trade the safety net makes: guaranteed continuity in exchange for a supplier and a tariff chosen for you. You can read more about this process on our page about the supplier of last resort.

Your tariff after the transfer: what you will pay

This is where a supplier failure costs households money. Any fixed rate contract you were on ends at the moment you are moved to the Supplier of Last Resort, and you are placed on that supplier's standard variable tariff, with no early exit fee³. Standard variable tariffs are generally the most expensive type of energy deal on the market⁹.

Some guides describe the tariff you land on as a "deemed" tariff, which could be more expensive than the one you were on⁸. The two descriptions amount to the same position: you have not chosen a deal with the new supplier, so you are on its default rate until you pick something else.

Once the transfer completes, the position is recoverable. Check your bill or online account for this information. Our page on deemed contract rates explains this default position in more detail.

Credit balances and debts: how each is handled

Money you are owed is protected. Ofgem's rule is that "your credit balance is still protected by the rules we set", and the new supplier will contact you about a refund¹. In practice the credit is usually carried into your new account, or refunded to your bank account once your final position with the old supplier is settled. When a supplier closes an account, it applies any credit to the final charge and either bills for any outstanding amount or refunds the leftover credit to your bank account¹⁰.

Debts work differently depending on how old they are. If you owe money to your old supplier and have been in debt for less than 28 days, what you owe should be added to your final bill⁴. Longer-standing debts are typically passed on, either to the new supplier or to a debt collection process.

If you are struggling to pay, suppliers have obligations. They are required to help you set up an affordable repayment plan⁵, and you can ask your supplier to agree a payment plan, payment break or reduction, review your payments and debt repayments, and give you access to hardship funds¹¹. Suppliers also run schemes and grants that can fund paying off energy debt¹². See our pages on final bills and credit refunds and supplier hardship funds for more detail.

Smart meters, prepayment meters and meter readings

Your meter does not care who bills you. If you have a SMETS2 smart meter, it keeps its smart functions across all energy suppliers, using the purpose-built national network, and SMETS2 is now the meter type used for any new smart meter installation¹³.

Older smart meters are less certain. You can switch suppliers if you have a smart meter, but the new supplier might not offer all smart meter services, such as remote meter readings, and the meter may need replacing¹⁴. If you suspect an issue with your smart meter after the transfer, or the new supplier identifies one, the supplier should promptly investigate it, resolve it themselves or with third parties, and keep you informed¹⁵.

Prepayment customers are covered by the same safety net as everyone else. A smart prepayment meter measures the gas and electricity you use and can send readings automatically to your supplier¹⁶, which means your top-ups and usage records carry over more cleanly than with an old-style meter. A meter reading taken on the day of the failure fixes the boundary between the old account and the new one, whatever type of meter you have. Our page on meter readings when a supplier goes bust covers this step.

What to do, and not do, while the transfer happens

The clearest instruction is a negative one: do not attempt to switch before the automatic transfer process is complete¹⁷. Switching mid-transfer risks your account ending up in the wrong hands, and there is nothing to gain, since you will be free to switch without exit fees once the new supplier has you.

When the new supplier does contact you, the direct debit follows the normal pattern for a change of supplier: set up the direct debit with the new supplier ahead of the takeover date, and cancel the old direct debit after your final bill has been paid¹⁸. Payments are not paused by the failure: any debt under 28 days old goes on your final bill, so stopping payments creates a debt where none needed to exist.

Two protections are worth knowing about. If a supplier ever switches you in error, the Erroneous Transfer Customer Charter applies, all energy suppliers must follow it, and you could get compensation¹⁹. And if you are moved to a new supplier against your wishes and want to leave, a normal switch must be completed within 5 working days⁴. Once the transfer is done, compare tariffs and switch if the standard variable rate you have landed on is not the right fit: our page on when you can switch after a supplier failure sets out the timing.