Beleaguered energy supplier Iresa, which has tens of thousands of customers, has ceased trading. Customers' energy supplies will continue as normal under regulator Ofgem's safety-net rules, and outstanding credit balances will be protected - here's what you need to know.
Update Tuesday 31 July: Octopus Energy has been appointed to take over Iresa's customers. For full info see Octopus Energy to take on Iresa's customers - here's what you need to know.
Ofgem has announced it is to choose a new supplier to take on Iresa's customers and this supplier will contact them when the process is complete. There's no set timescale for this but it's likely to take a few days.
Iresa has struggled in recent months - following widespread reports of poor customer service from the small supplier, with many facing unexpected increases to monthly direct debits and unexpected one-off payments, made worse by long call waiting times and slow (or no) responses via email and social media.
In February, the regulator opened an investigation into Iresa, before announcing in March it had taken the unusual decision to ban the supplier from taking on any new customers - giving it three months to sort out its customer service issues.
Last month, Ofgem announced Iresa had failed to do this, and extended the ban indefinitely - with the regulator saying the ban would remain in place until the supplier could prove it had met all customer service targets Ofgem had set for it.
We don't know exactly how many customers Iresa currently has - Ofgem says fewer than 100,000. However, in January 2018, before the ban was put in place, the supplier told us it had around 100,000 customers.
Ofgem says you shouldn't switch just yet - wait until you're transferred to a new supplier. As soon as this happens, do a full market comparison on our free Cheap Energy Club to make sure you're on the best deal.
'Iresa's demise was entirely predictable'
Martin Lewis, founder of MoneySavingExpert.com, said: “Sadly, Iresa’s demise was entirely predictable. Since it first launched, we have warned in our Cheap Energy Club that its prices looked unsustainable and it was raising concerns for us.
“When Ofgem introduced special measures for Iresa, we welcomed the move because it has been an absolutely appalling company that hasn’t communicated with its customers and has left many people tearing their hair out.
“And while in the short term this will be very frustrating for its existing customers, hopefully when Ofgem ports them to a new company things will improve.”
'A change is needed in the energy market as a whole'
Martin added: "There is a wider issue in the energy market with the political push to encourage as many new entrants as possible. While increasing competition is important, it cannot be done at all costs. It is time that much stricter tests were set up before firms are granted licences.
“First, the people setting them up must be ‘fit and proper’ – energy is a key public service and can’t be run by those looking for a quick buck or at the extreme to rip people off.
“Second, firms need appropriate financial means. If not there’s a risk they operate like a Ponzi scheme aiming to draw people in with unsustainably cheap prices to gain cash flow, without the resources to support those customers.
“Third, there should be capacity limits based on the infrastructure set-up. Too often firms come in with loss-leading prices which attract large numbers of customers, but an inability to deal with those volumes.
“The good news is that on the back of our suggestions, Ofgem announced six weeks ago it will review its licensing around this. And I hope that if these measures are put in place, we won’t see the likes of Iresa again.”
I'm an Iresa customer – what do I need to do now?
At the moment, Ofgem says you shouldn't switch supplier. Sit tight, take a meter a reading and wait for the new supplier - which will be appointed by Ofgem shortly - to contact you.
If you need any further support during this period, Iresa has advised customers to contact Ofgem - the regulator has a comprehensive set of FAQs here - or call Citizens Advice on 03454 04 05 06.
Will I keep my tariff - and will my bills go up?
Ofgem says that your current contract - whether you're on a fixed or variable tariff - will end when you join the new supplier, and you'll be placed on what's known as a 'deemed' tariff. These are often more expensive.
In the past we've seen some suppliers honour existing tariffs when taking over from a supplier that's ceased trading - however the information Ofgem's put out suggests that won't happen in this case. It's said "your old tariff will end".
Once the new supplier contacts you, check if the deal you are being offered is the cheapest available to you. You won't be charged exit fees if you decide to switch.
You can use our Cheap Energy Club to find the cheapest tariff.
I was in credit with Iresa – how do I get this back?
Ofgem says that your new supplier will pay back any outstanding credit you may have.
Once Ofgem has appointed the new supplier, this new supplier will contact you to explain how this will work.
Ofgem says you should take a meter reading and a note of the balance if you know it, and wait for the new supplier to get in touch.
I'm paying back debt to Iresa. Will I pay this to the new supplier instead?
This is unclear at the moment. It depends on whether the new supplier arranges to take on debts owed to Iresa. If not, you may still have to continue to pay it back to Iresa or the administrator appointed to run what remains of the company. Either way you WILL have to pay what you owe.
Once a new supplier is identified by Ofgem, it will explain how things will work in practice.
If you have a direct debit with Iresa it should be automatically moved to the new supplier when it's appointed - though Ofgem says you can choose to stop this and cancel your direct debit before the new supplier contacts you if you want to.
When the new supplier does contact you, it will explain how they'll take on your account, including direct debit arrangements.
I'm already in the process of switching from Iresa. Will this still go through?
If you have a switch in progress, you'll continue to be moved to the new supplier of your choice.
What does Ofgem say?
Ofgem says: "If you are an Iresa customer, there is no need to worry. We will make sure that your energy supplies are secure and your credit balance is protected.
"Ofgem is working as quickly as possible to choose a new energy supplier for you. Whilst we are doing this, our advice is to 'sit tight' and don't switch.
"Your energy supply will not be affected and will continue as normal - the thing that will change is that your energy will come from a new supplier."
The regulator declined to comment on why the supplier has ceased trading, and we've yet to hear back from Iresa.
What is the Ofgem safety net?
The Ofgem safety net was introduced in October 2016 to protect customers' credit balances should a supplier go out of business.
The rules allow the replacement supplier to recover credit balances via a levy across all energy suppliers.
The rules were tested just one month after they came into effect when GB Energy went bust and Co-op Energy took on the supplier's 160,000 customers. Under the safety-net rules, Co-op Energy agreed at the time to honour all outstanding credit balances for current and past customers.