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/ 14 December 2021

Gas and Energy Supply and Prices Crisis

Brian Cuthbertson, Head of Environment and Sustainability, shares advice around the current energy crisis. 

Parishes like everyone are understandably anxious about the ongoing crisis arising from steep increases in the wholesale price of gas, and possible restrictions of supply.

Companies at risk

A number of suppliers have ceased trading since autumn 2021, but we do not know whether any other particular supplier is at imminent risk. Advice on what to do, in the event your supplier does cease trading, is however available from Ofgem at:

https://www.ofgem.gov.uk/what-happens-if-energy-supplier-your-business-goes-bust

https://www.ofgem.gov.uk/information-consumers/energy-advice-households/what-happens-if-your-energy-supplier-goes-bust.

The first of these pages applies to any business – which may normally include your church.  The second applies to domestic/residential properties and households.

An amount of other helpful information is included on the above pages.

Whilst the above guidance should be referred to, this is what the regulator Ofgem advises if a supplier has ceased trading already

What should happen next

However it may be prudent to consider proactive steps to take while your supplier is still trading, whether or not you think they are at risk.  Most of Ofgem’s advice holds good in this case too, except not to cancel any direct debit whilst your supplier is still in business and supplying you.

Also whereas for a domestic property credit balances are protected, unfortunately that is not so for a church, which counts as a business property. In that case only the supply is protected, not your money.  Many who are paying regular direct debits may have been in credit before winter set in, having used less energy over the summer, and in readiness for increased heating bills over the winter. Any overpayment will likely be shrinking by Spring 2022. You may be able to change the amount of payments, but don’t cancel while your supplier is still trading. Of course, it is reassuring to know that no interruption of supplies is currently foreseen.

Bulb

The case of Bulb Energy is different from other suppliers who have become insolvent. For all the others (so far at the time of writing), Ofgem has made arrangements to transfer customers to other suppliers, such as British Gas. This is done automatically. Once that transfer has happened, customers can switch again to another company or tariff if they wish. But Bulb has far too many customers to be transferred lock stock and barrel to anyone else.

Therefore Bulb was placed under ‘special administration’, meaning the running of accounts continues unaffected while the administrators, Ofgem and the government decide what to do with them, which may take a few more weeks or months to resolve. Meanwhile the government is providing financial support. Bulb may not have been ‘too big to fail’, but it is too big to collapse, to default on its obligations, and certainly cannot be allowed to trade while insolvent (which would be illegal).

Taking precautions

Whatever supplier you are with, the following actions by churches and others are suggested:

  • Visit your account(s) with your supplier(s) online, record the balance(s) and take screenshot(s).
  • Take meter readings frequently, both gas and electricity. No-one should wait till a supplier ceases trading. Photograph the meters. Do this even if you have smart meters.
  • Report numbers to your supplier(s). There is likely to be an online facility to report customer readings. Take screenshots of online confirmations, and also of your account balances.
  • If you have a significant credit balance when Spring comes, call your supplier(s) and request a refund. This may or may not come through in time if your supplier is in trouble, but you can only try.

It is important to keep an eye in this way on your electricity as well as your gas, whether or not you have a single dual fuel account with a single supplier. Sadly, electricity is affected as well as gas, because gas is used to generate most electricity. Also your supplier may be selling gas to others, even if not to you, and all are likely to be financially stretched in current circumstances. Even if you are purchasing renewable energy, the severe market distortions which are occurring may still be affecting your supplier.

It is not normally advisable to attempt to switch to another company, while your current supplier is still trading and supplying you. Should they cease trading, you can then switch if you wish, but only after Ofgem has reallocated you to a new supplier. You can then choose a suitable company to switch to, bearing in mind any up to date intelligence if and when that arises. Transferring takes a while, and if done prematurely could cause a complex administrative tangle, possibly falling between two stools, as well as diverting the attention of suppliers from their urgent priorities. Besides, any company that one succeeded in transferring to might turn out not to be a safe haven.

Solar panels and smart metering

However, the case may be different for customers with solar panels or smart metering. If you have solar panels, you should be in receipt of the Feed-in Tariff (FiT) or the Smart Export Guarantee (SEG). Will these be transferred, when an existing supplier has ceased trading?  Does the FiT or SEG transfer together with their account?

Feed-in Tariff

The answer to the question above is No. The new supplier may contact the customer about it, but it would be unwise to wait for that to happen. Because Bulb is under Special Administration, any Bulb customer with the FiT should consider using the time this gives them to switch to a new FiT licensee. Customers of other suppliers should act fast to re-secure their incoming credits if/when Ofgem transfers their account, either with their new supplier if licensed, or by switching again at once, to a third supplier who is licensed. But the customer would be well advised to make sure they have details of their original registration to hand beforehand, and if not to speak to their present supplier, before they potentially get into trouble. Otherwise the particulars of their FiT registration may become inaccessible.

Smart Export Guarantee

The FiT was superseded by SEG a couple of years ago, for new entrants after that. Much the same points therefore apply. The customer should ask their new supplier whether they are SEG licensed, and if so to set up payments promptly. Otherwise they will need to switch again, to an SEG licensee.

Smart meters

In the above case, the customer should have a smart meter. They (and anyone else with a smart meter) should ascertain whether it is under the ‘SMETS2’ standard, or if not whether it has been upgraded to talk to the national communications network. Their existing supplier should know. If it isn’t SMETS2 or upgraded, then it will go dumb when the account is transferred, and the customer will be back to taking manual readings.

Tariff licensees

Lists of FiT and SEG licensed suppliers are at https://www.ofgem.gov.uk/information-consumers/energy-advice-households/what-happens-if-your-energy-supplier-goes-bust.

More information and advice

It is impossible to foresee all the circumstances that may arise for parishes and people, as this crisis continues to unfold in the coming days and weeks. When possible and as appropriate, further comment or advice will be communicated.  

A parish can at any time contact their area financial advisor, or the Head of Environment and Sustainability to discuss the situation and seek up to date advice.


About Brian Cuthbertson

Brian is the Head of Environment and Sustainability at the Diocese of London.

Read more from Brian Cuthbertson

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