Posted in the MoneySavingExpert forum but thought I would ask for view here as well.
We are looking at switching suppliers and Bristol Energy and Robin Hood (via Ebeco) are in the mix. Looking for a fixed rate deal, for 2 years if possible. There was an article in Private Eye this week saying that Bristol Energy was losing money, Robin Hood had only just eased into the black.
My understanding is that if you take out a deal with one of these small companies and the company folds you will retain your deal and you will be transferred to another supplier. If you are on a fixed rate deal and energy prices are rising, this will not be attractive to other suppliers if they are guaranteed to make a loss for the remaining term. How does this work, then?
My understanding, also, is that with stable or falling energy prices the small suppliers without their own generating/production capacity can undercut the big players who have to hedge long term. However if the energy prices are rising then the small players take the hit first and have to raise prices because they don't have the capital to hedge.
Apart from the B word, the USA flexing muscles at Iran could signal a major disruption in oil and gas supplies, forcing prices up. A major drop in the UKP could also make anything traded in dollars more expensive in the UK.
Based on that, a couple of questions:
(1) Is a sound (if immoral) strategy to go for the lowest priced fixed rate deal in the knowledge that if the supplier fails you will be allocated another supplier?
(2) What happens if a supplier fails and no other energy supplier wants you as a customer?
Cheers
Dave R