More than a million households have seen their energy firm go bust in the last few years and that number is likely to grow as wholesale prices rise

  • Many small and medium sized suppliers exited the market
  • Safety net means if a firm fails, households will be switched to new provider 
  • We reveal the best energy deals on the market you can switch to now 

By Grace Gausden For This Is Money

Published: | Updated:

Some 1.7 per cent of domestic energy customers have been rescued by the Supplier of Last Resort process in the last two years, new research has revealed.

Between 2019 and 2020, 887,000 domestic customers were supplied by a company that exited the market via SoLR, according to data from energy analysts, Cornwall Insight.

It also found that in 2021 alone, a further 410,000 customers were affected by the SoLR process – meaning more than a million households have been supplied gas and electricity by a firm that has gone bust. 

With wholesale prices rising, it could lead to more smaller firms exiting the market, with margins tight and competition fierce. 

Over a million domestic customers were affected by the Supplier of Last Resort process

Over a million domestic customers were affected by the Supplier of Last Resort process

The Supplier of Last Resort procedure was established in 2003 to ensure that when supplier failure occurs, affected domestic customers are guaranteed continuity of supply.

This means that if a company is no longer trading, consumers are given another provider who will automatically take over their supply and ensure they are never without power.

In recent times, the process has been used frequently due to the large number of small and medium size suppliers who have collapsed.

Providers that have failed include Tonik, Toto Energy, Solarplicity, Our Power, GnERGY and Go Effortless.

Naomi Potter, analyst at Cornwall Insight, said: 'The first half of 2021 has already seen 1.5 per cent of customers in the domestic retail market being served by suppliers subject to the SoLR process, almost as much as was seen in the whole of 2019 and 2020 put together.

'This figure is largely the result of Green Network Energy's exit at the end of January.

'EDF Energy was appointed SoLR for the supplier's 360,000 customers making this the largest SoLR exit since the mechanism was first introduced.'

The energy price cap is expected to rise by £150 when it is reviewed in August, experts say

The energy price cap is expected to rise by £150 when it is reviewed in August, experts say

She adds: 'The regulator has responded to the challenges around market exits with the introduction of tougher entry tests for suppliers in June 2019, followed by the supplier licensing review changes which came into effect in early 2021.

'However, this is unlikely to change the situation in the market immediately, and looking forward, rising wholesale prices and ongoing Covid-19 related impacts suggest a difficult year ahead for suppliers, with further SoLR exits very much in scope.'

The energy price cap is also due to be reviewed next month with experts warning that the limit is likely to increase by £150 - the biggest hike yet. 

The rising cap is mainly due to the wholesale energy market, where gas prices have increased by 55 per cent since January. 

They are now at their highest level since 2005 and continue to rise.

As a result, customers are encouraged to use price comparison sites to see if they could save money on their energy bills by switching to another provider or a fixed tariff as they are typically cheaper than default ones.  

Best energy deals on the market 

All of the best value energy tariffs at present are fixed, highlighting how much cheaper they are than default plans.  

The best energy deal on the market currently is with challenger provider, Zebra Power, on its Zebra Fixed Rate April 2022 v1 Paperless tariff costing an average of £1,000.96.

The second cheapest tariff is the Simple and Flow12M deal from Avro Energy costing £1,035.53.

However, both the top two deals are not green so those looking to be more environmentally friendly may choose to look elsewhere. 

The third best deal is with Utility Point on its Just Join Up 21 12M Fixed Wk28 tariff which is green and costs an average of £1,035.67.  

Eon and its offshoot Eon Next are the only Big Six suppliers to make the list with its Fix Online v46 and Next Online v6 deals both costing £1,126.18. 

TABLE TITLE
Supplier Plan Type End date Green Exit fee Average price
Zebra Power Zebra Fixed Rate April 2022 v1 Paperless fixed 12m N 60 1,000.96
Avro Energy Simple and Flow12M fixed 12m N 0 1,035.53
Utility Point Just Join Up 21 12M Fixed Wk28 fixed 12m Y 72 1,035.67
Green Carnot fixed 12m Y 72 1,042.55
Outfox the Market Fix'd 21 15.0 fixed 12m Y 0 1,077.01
GOTO.Energy Direct Control Green July 2022 V3 fixed 12m Y 80 1,077.65
Bristol Energy BE Super Green June23 Issue 13 fixed 25m Y 0 1,121.08
Orbit Energy Blue Fix 12 - Apr21 fixed 12m Y 60 1,122.08
E.ON Fix Online v46 fixed 12m Y 60 1,126.18
E.ON Next Next Online v6 fixed 12m Y 0 1,126.18
Source: Uswitch (prices correct as of 16 July 2021)     

Over a million households have been affected by Supplier of Last Resort process in last 2.5 years

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