More than half a million Avro Energy customers are shifted to challenger Octopus after going bust, Ofgem confirms
- Avro Energy went bust last week with 580k domestic customers
- Supplier of Last Resort sees bigger firms step in and take on customers
- Octopus Energy will now have 3.1m energy customers
- We explain what ex-Avro customers need to know about the switch
Around 580,000 domestic customers of collapsed firm Avro Energy have been moved over to Octopus, Ofgem revealed today.
The ongoing energy bill crisis has seen a number of firms go bust and the watchdog’s Supplier of Last Resort kick in.
It is believed there could be as few as 10 suppliers who survive the sharp increase in gas prices and fine margins in which they operate.
Ofgem said that Avro customers will be transferred to a new contract with Octopus from today and the challenger energy supplier will then contact them to explain what happens next, including personalised tariff information.
Rescued: Octopus Energy have taken on Avro customers from today – pictured, Prime Minister Boris Johnson visiting the Octopus HQ last October
Octopus, which is based in London, is also rumoured to be interested in snapping up rival Bulb Energy which has 1.7million customers.
It already has around 2.5million customers of its own, before today’s announcement which will see it swell to 3.1million. It is the fifth biggest supplier in terms of customers, and has been the most successful challenger to what was known as the ‘Big Six’.
Ofgem says Avro customers can switch without being charged any exit fees – but adds: ‘Our advice is not to switch immediately, but wait until Octopus Energy has been in touch with you. They will contact you with personalised information about your tariff.
‘Your account will be fully set up with them in the coming weeks or months. Octopus Energy will contact you at this point to confirm once this has happened.’
It adds that waiting for it to contact you will be the ‘smoothest’ way for any credit balances customers had with Avro to be honoured by Octopus.
The watchdog adds: ‘The review process may take a sometime as Octopus Energy needs to receive and review records from Avro Energy.
‘When calculating your credit balance, they will deduct any unbilled charges for your supply by Avro Energy.
‘Current and former customers who owe money, or are in debit to Avro Energy should wait to hear from Octopus Energy or Avro Energy’s administrators who will talk to them about repayment arrangements.’
Octopus said on its website: ‘We offered to take on this responsibility because we believe that our technology platform (Kraken) will make the change as smooth and straightforward for their customers as possible.
We have a strong track record in large customer migrations and would like to reassure customers that there will be no interruption or impact to their energy supply.
We’re asking Avro customers not to contact Octopus Energy right now as we are loading their details onto our systems, and hoping to work with their administrators to make the process as seamless as possible – we will contact all Avro customers in the next 48 hours to let them know what happens next.
When customers are moved to a new supplier, they will be put on a special ‘deemed’ contract which is a contract they haven’t chosen and not the fixed deal they may have previously had.
Deemed contracts can be more expensive because the supplier takes on more risk, for example, they might have to buy extra wholesale energy at short notice for new customers.
Therefore, they charge more to make up for it. As wholesale prices are increasing as it is, these contracts are likely to be pricey.
However, Ofgem said it will try to get the best possible deal for customers.
While customers can switch away once they are moved to the new supplier, in the current climate it may be difficult to find a good value fixed deal.
In fact, it may be worth moving to a default tariff, which, whilst usually considered pricier, are capped at £1,277 a year as of 1 October, thanks to Ofgem’s energy price cap.
Avro are the biggest casualty so far of the ongoing crisis. The next biggest in terms of customer numbers are People’s Energy Company with 350,000 customers and Utility Point with 220,000.
British Gas has since rescued People’s Energy customers, and EDF have taken on Utility Point’s ones.
Questions have been raised as to how closely new energy firms have been scrutinised before being allowed to trade.