MSE News: GB Energy goes bust, 160,000 customers affected

OneLeggedPig

Wow- just seen the email about the Co Op taking up the customers and honouring the prices they were paying on their GB tariffs.

What can you say. Co Op Energy. What absolute solid-gold legends.

System

Autolycus2000 wrote: »

I was on GBE's Fixed 12 Sapphire tariff (12 month fixed from March 2016). For the past few months my bills have carried a message saying I could save £30 or so by switching to another tariff. The name varied depending on which month it was but it was always something like Fixed 12 Crystal, Fixed 12 Diamond, etc.

A couple of weeks ago I finally got round to contacting them via the website and asking them to switch me. It was the lack of reply which prompted me to look at their site this weekend and find they'd gone bust.

But what I don't get is this. If their prices were increasing over the past few months, how come a bill as recent as the one sent at the beginning of November said I could expect savings of £85 per year by switching to Fixed 12 Diamond?

Did anyone else see similar messages on their bills and did you successfully switch to a new tariff that was cheaper than one you signed up to prior to this summer's price rises?

As mentioned numerous times on this forum, energy suppliers use the Ofgem-mandated inflated savings methodology (as do most comparison sites). The calculation goes as follows:

Cost for next 12 months - 'X' months on current tariff PLUS '12 -X' months on the standard variable tariff

But you switch to new fixed tariff which has a higher unit cost but is less than the standard variable rate

Result: a forecast saving but in truth a higher annual price. The savings increase the closer that you get to the end of your fixed tariff term.

Jazzy_B

I cancelled DD on Sunday but just phoned bank and they have reinstated it, saves any hassle on my part. Have to say Ofgem have come up trumps on this one

uptdale

It's illegal to carry on trading when you are insolvent.

That's not quite accurate. Wrongful trading occurs when the directors knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation, and they did not take every step with a view to minimising the potential loss to the company’s creditors (Section 214 of the Insolvency Act). So the directors can continue to trade while they explore realistic options for safeguarding creditors' money - and that would certainly include discussions with Ofgem. We know from Ofgem that they went through a "competitive process" before choosing the Coop. Two working days plus a weekend just seems too short a time to conduct such a process and for the Coop to satisfy itself that it could handle the business and to agree the necessary announcements. That's why it seems to me that the process must have started before Friday, and something happened on Friday to force a public announcement - that might have been a leak from another energy company, or it could have been a higher than expected energy bill. If and when a liquidator is appointed we might find out.

I still do not understand the advice about direct debits. As someone said, it was a no-brainer to cancel your DD - in the absence of a sufficient explanation from Ofgem for not cancelling. We now have the email from the Coop which says

We are planning to arrange a transfer of your existing direct debit mandate over to Co-operative Energy in the next few weeks. There will be further communication on this in due course. Again, you do not need to do anything and please do not cancel your direct debit.

Now if I agree to a DD in favour of one company, I do not expect the benefit of that DD to be taken by another company without my permission - or any opportunity for me to assess the creditworthiness of that company. Can anyone familiar with banking explain how that works? If it is right that another company can take the benefit of my DD without my say so, it should make everyone more wary of agreeing to DDs.

Chris75

Well done Ofgen
Well done Co-op
Thank you to both

What is not as obvious is that there is a cost to this which will have to be picked up somewhere. It will either be passed on to all electricity customers -all of us- or result in lower profits for all electricity companies which will affect shareholders including pension funds etc.

It is predicted that other small suppliers may well fail in a rising price market.

Lesson to learn: We need some sort of financial health check on companies wanting to set up as energy suppliers or in any of the other industries with official regulators. We have the regulators because the services are regarded as vital so lets treat them that way.

Lottihr

Impressed, anticipated being put with one of the big companies and on their standard tarriff, to be frank no nothing about the Co-op, but happy at the moment, once the dust has settled will look at the switching sites, but right now am happy. I echo above, thank you Ofgen and thank you Co-op for taking us.

sheff6107

Jazzy_B wrote: »

I cancelled DD on Sunday but just phoned bank and they have reinstated it, saves any hassle on my part. Have to say Ofgem have come up trumps on this one

Why? The DD is set up to take your money and put it into a company's account that is no longer trading. It's like posting a blank cheque through the letterbox of a boarded up business.

As of today any payments need to go into the Co-op's account and we don't know the details yet.

NannaLyn

Just received the notification from Co-op Energy confirming that the terms will stay the same for the duration of the original contract with GB Energy. Must say I always had good service from GB Energy and they actually lowered my direct debits by £9 pm last month. Glad Ofgem is there as a backup. No point in panicking - will wait and see what the Co-op's prices are like before considering switching at the end of the term.

OneLeggedPig

sheff6107 wrote: »

Why? The DD is set up to take your money and put it into a company's account that is no longer trading. It's like posting a blank cheque through the letterbox of a boarded up business.

As of today any payments need to go into the Co-op's account and we don't know the details yet.

I checked the FAQs that the Co Op gave and they said that if you have cancelled the DD then it's (as expected) no problem. I cancelled mine for safety, will set one up with the Co Op once they sort me out.

Poundnote

Take note an offer you can not refuse:-
Have done a comparison between GBE Fixed 12 Crystal and Co-Operative Energy Fix & Fly result Co-op is 39% more expensive.