Small energy firms’ customers warned over credit as Economy fails | Money

Consumers signed up to small energy firms are being warned not to build up large credit balances after Economy Energy collapsed this week owing some of its customers over £300.

Nine small gas and electricity suppliers have failed in the past 12 months, affecting more than 800,000 households. Energy regulator Ofgem has systems to ensure people don’t lose out if their supplier goes bust, but former Economy customers say they waited a long time to get their money back.

Guardian reader Euan Simpson switched away from Economy in October but says he is still owed £330. He says the firm had kept upping his direct debits in what he believes was an attempt to boost its cash reserves. Others complain of being in the same boat.

“I would question why, for such a long period, this company was allowed to continue to trade and accept new customers while withholding monies due to ex-customers,” he says.

Questions have also been raised as to whether Ofgem carried out enough checks on suppliers entering the market. When a supplier collapses, the bill falls to other energy firms’ customers.

Households already faced a bill of at least £80m from other failed suppliers, before this week.

“We’re working to find a supplier who will cover outstanding credit balances for those who’ve switched away from Economy Energy,” says Ofgem. “We’ll be able to say more when we announce the new supplier in the coming days.

“Previously, the new supplier has honoured all credit balances.”

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