Leigh Park pensioners feared they'd be left out of pocket after energy firm went bust
The Leigh Park couple, both in their mid 80’s, signed up with the Coventry low-cost energy supplier Economy Energy in 2014.
The switch was initiated by their eldest son David, who helped them move from a standard British Gas dual fuel tariff, saving more than £300 a year.
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Hide Ad‘At the time we were really beginning to feel the pinch,’ Bill said, ‘so David did some online research for us and found this company that specialised in low-cost deals for people like us on prepayment meters.
‘They put us on a smart meter account so we could see how much gas and electricity we were using and the cost.
‘After the first year we switched over to a direct debit monthly account, where we paid a fixed sum to cover our winter and summer bills.
‘The prepayments soon began to mount up, so we treated the account as a savings measure after it was explained that any surplus would be refunded annually.
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Hide Ad‘Then in 2017 things started to go wrong. They started disputing the balance on our account, we weren’t getting regular quarterly bills, and the over payments weren’t being refunded promptly, if at all.’
‘When we complained, we got the run-around or were just ignored. Then when we started making enquiries, we were surprised to find the firm were close to the top of the national energy suppliers’ complaints league.’
Fed up to the back teeth with all the hassle, David helped the couple switch to E.On
But in the interim, what they didn’t know was Economy Energy was on its way out. It abruptly stopped trading in January, after it had been banned by the regulator Ofgem from taking on new customers.
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Hide AdBill only realised they’d unwittingly been caught up in the drama when the firm’s 235,000 customer base was automatically transferred by Ofgem to another firm, Ovo Energy, leaving their ongoing £687 overpayments in limbo.
Bill was furious that they’d never seen neither hair nor hide of a final bill nor their overpayments. What got under his skin was an instruction from Economy Energy not to cancel the direct debits until they received their refund. In the meantime monthly payments were still being taken from their bank account right up until the business went to the wall.
The anxious couple went along to their local Citizens’ Advice office and were reassured when it was explained a national safety net was in place precisely to deal with such circumstances.
The credit balance owed to them would be refunded in full by a company appointed by Ofgem to take over the business.
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Hide AdBill got in touch with the regulator to clarify the situation, and was told everyone owed money by the liquidated energy firm would be credited by Ovo Energy, a firm that they’d appointed to take over a number of other small to medium energy providers when they went bust.
To his relief, Ofgem also confirmed that people like him who’d left the company before it went down the tubes would also have any money refunded in due course.
Bill accepted they’d have to wait for their refund, but relieved they wouldn’t be left catastrophically out of pocket.
But as the months rolled by and Ovo Energy wasn’t able to tell them when the money would be returned, Bill became concerned and decided to call in Streetwise to investigate.
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Hide AdWe explained the energy market used to be dominated by the ‘Big Six’ providers, but in recent years there have been a growing number of smaller players, many of which offer cheap appealing tariffs.
However, since the start of 2018, more than a dozen small and medium-size suppliers have gone out of business.
Streetwise had previously been approached by a number of readers like Bill who were customers of failed smaller energy companies, highlighting problems getting refunds for credit owed or issues with billing and account information.
When we started to probe the problem, Victoria Arrington from switching service Energy Helpline warned it was to be expected that the growing list of gas and electricity company failures was likely to get longer.
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Hide Ad‘The energy market has been hit by an upward trend in wholesale prices but also by increased red tape and tougher regulation,’ she said.
‘It includes a Government enforced price cap on standard variable tariffs after a political flare-up over rising bills.’
Industry regulator Ofgem was also clearly concerned that despite the safety net, the growing failure of alternative energy providers to challenge the dominance of the top ‘Big Six’ might be perceived as a deterrent to people switching to cheaper deals.
As a worried Bill had been energetically pursuing Ovo Energy for almost seven months to sort out his account and refund with the liquidated Economy Energy, we asked them to explain the delay.
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Hide AdThey confirmed that they’d set up a new account to enable the credit balance to be transferred and refunded.
Just a week later a relieved and euphoric Bill rang us to confirm he’d received a full and final settlement cheque, and his worrying ordeal was finally over.
‘It was dragging on and on,’ Bill said, ‘and until you were involved and reassured us about how we would be refunded, we were doubtful we’d ever get our money back.
‘I can’t tell you how grateful we are, as to us it was money we really couldn’t afford to lose.
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Hide Ad‘Now we know how we’re protected from gas and electric firms going bust and the supply won’t be cut off, we’re determined not to be put off by the experience.
‘We’ll be switching again to another firm, but this time we’ll take your advice and not let overpayments build up.’
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