Spark Energy stops trading – what you need to know

The energy regulator Ofgem says it will now look to appoint a new supplier to take on Spark Energy's customers. Once this happens, the new supplier will contact you to let you know what happens next. In the meantime, Ofgem says customers should sit tight and not try to switch away from the failed supplier. 

Spark Energy is the sixth domestic supplier to collapse this year, and the announcement comes just two days after Extra Energy, with 108,000 customers, stopped trading. A notice on the Spark Energy website blamed "increasingly tough trading conditions in the energy industry".

The Energy Ombudsman said today it has opened investigations into more than 800 consumer complaints about Spark Energy in the past 12 months, and MoneySavingExpert.com has previously reported on billing problems at the firm. In February, the company apologised for the second time after a debt collection firm wrongly chased ex-customers for payment.

I'm a Spark Energy customer – what should I do?

If you're a Spark Energy customer, Ofgem's advice is:

• Do not switch to another energy supplier at this stage.

• Take a meter reading, ready for when your new supplier contacts you.

Ofgem says this will make the process of transferring customers over to a new supplier, and paying back any outstanding credit balances, as smooth as possible.

More information will follow from your new supplier once one has been appointed in the coming days.

If you need any further support, Spark Energy 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.

However, in the past we've seen some suppliers decide to honour existing tariffs when taking over from a supplier that's ceased trading, so it is possible this could happen.

Once the new supplier contacts you, check if the deal you are being offered is the cheapest available to you. Use our free Cheap Energy Club to do a full comparison and find your cheapest tariff. You won't be charged exit fees if you decide to switch.

I'm in credit with Spark Energy – how do I get it back? 

Ofgem says that once a new supplier has been appointed, it will pay back any outstanding credit you may have.

Once the regulator has appointed the new supplier, you will be contacted to explain how this will work. Ofgem says you should take a meter reading and a note of your balance, and wait for the new supplier to get in touch.

If you've switched or you're in the process of switching away from Spark Energy, any remaining credit is protected under Ofgem's 'safety net' scheme.

I'm paying back debt to Spark Energy. 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 Spark Energy. If not, you may still have to continue to pay it back to Spark Energy or an administrator if one is appointed to run what remains of the company. Either way, you will have to pay what you owe.

Once a new supplier is appointed by Ofgem, it will explain how things will work in practice.

Should I cancel my direct debit with Spark Energy? 

The new supplier should be able to automatically move your direct debit over once it's appointed – though Ofgem says you're free 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 it'll take on your account, including direct debit arrangements.

What if I'm a prepay customer?

The notice posted on Spark Energy's website says prepay customers should continue to top up as normal – your supply won't be interrupted.

I'm already in the process of switching from Spark Energy. 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.

If you're in the process of switching to Spark Energy, Ofgem says it should go through as planned and you'll then be moved over to the supplier Ofgem chooses to take over. 

What does Ofgem say?

Ofgem's executive director for consumers and markets Mary Starks said: "Our message to energy customers with Spark is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.

"Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we're doing this, our advice is to 'sit tight' and don't switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.

"Although we have seen a number of supplier failures this year, our safety net procedures are working as they should to protect customers."

New tests for energy suppliers

Spark Energy is the sixth – and largest – domestic supplier to cease trading this year, following Extra Energy earlier this week. In July, there was the high-profile collapse of Iresa Energy, with 90,000 customers, and we've also seen regional supplier Future Energy, which had around 10,000 customers, go in January, along with Usio Energy, which had 7,000 customers, and Gen4U, which had 500 customers.

Earlier this week, Ofgem proposed that new energy suppliers should have to pass financial and customer service tests in order to obtain a licence to operate.  

Under the plans, companies would have to demonstrate they have adequate financial resources and can meet their customer service obligations before being awarded a licence to supply energy.