Energy suppliers going bankrupt: what does it mean for customers?
The Dutch energy market is having a hard time. In recent months a number of energy suppliers went under and that also has consequences for the people and businesses that are customers there. They certainly will not end up without electricity, but they may be hit hard financially. What happened and what the consequences are can be read in this blog.
01Wave of bankruptcies hits the Dutch energy market
Due to the high energy prices, partly the result of the economic recovery after the lockdowns, a number of energy suppliers have run into considerable difficulty. Many energy suppliers had already scaled back their energy deals or put them on ice completely, but for some energy suppliers even that was not enough to save what could be saved. They irrevocably went under.
Welkom Energie
It all started at the end of October, when the ACM (Autoriteit Consument & Markt) revoked the licence of Welkom Energie. Welkom Energie had already run into financial difficulty earlier, because the previous winter was colder than normal. As a result, Welkom Energie had to pre-finance a lot more. It would eventually get that money back through the final bills, but it put its cash flow in serious trouble. The explosively rising energy prices then caused the remaining capital to melt away like snow in the sun. That is why it informed the ACM that it could no longer meet the licence conditions and that it could no longer guarantee security of supply.
The ACM then pulled the plug on the company and as of 1 November 2021 it was no longer allowed to supply gas and electricity to its 90.000 customers. On 29 October 2021 the bankruptcy of Welkom Energie was declared by the Midden-Nederland district court and the receiver was appointed.
ENSTROGA
Not long after the bankruptcy of Welkom Energie, it was the turn of a second energy supplier: ENSTROGA. ENSTROGA had been in financially troubled waters for some time and had previously presented customers with a price increase. Customers who did not agree suddenly saw their energy contract terminated. That is of course not allowed. The ACM intervened in October and imposed a penalty of 15.000 euros per week on the company.
ENSTROGA stated that if it could neither simply raise prices nor show customers the door, it could no longer operate. And so it happened. At the beginning of November it asked the ACM to revoke its supply licence. The ACM agreed to the request of this small energy supplier with fewer than 500 customers.
Allure Energie
In mid-November Allure Energie unwillingly added its name to this list. It asked the ACM to revoke its supply licence and itself filed for bankruptcy at the court. The ACM found that the energy supplier with around 600 customers was indeed no longer able to supply electricity and gas reliably and then revoked the licence.
Allure Energie did state that the cessation of trading activities had nothing to do with the high energy prices, nor with organisational competence. According to them, it was solely the result of an internal legal battle between the shareholders, which made it impossible to continue the service.
Anode Energie
At the beginning of December it was Anode Energie's turn. The company informed the ACM that it would file for bankruptcy and asked for its supply licence to be revoked. The ACM ruled that Anode Energie could no longer guarantee that it could reliably supply energy to its approximately 14.000 customers and revoked the licence.
Of the 14.000 customers, about 5000 were direct customers of Anode Energie; the other 9000 customers were customers of Anode Energie through resellers such as Green Dutch Energy and Gezinsenergie. Anode Energie said that they had got into trouble due to the high energy prices.
Sepa Green Energy
On 13 December 2021 Sepa Green Energy followed, thereby becoming the fifth Dutch energy company to go bankrupt in 2021. Sepa Green Energy had about 20.000 customers. These were both consumers and small business customers.
The company had its energy purchasing, also called sourcing, carried out by the company Energie I&V.; Energie I&V;, which only recently received heavy fines because it had taken over small consumers from another energy supplier without permission, was part of the Anode Energie group. Anode Energie had already run into trouble earlier, as can be read above. On 6 December 2021 the Rotterdam district court declared the bankruptcy of Energie I&V; and a receiver was appointed. So in its downfall Energie I&V; also dragged Sepa Green Energy down with it.
02Consequences of the bankruptcy of an energy supplier
If an energy supplier goes bankrupt, its customers will not be left without electricity or gas. So much for the good news, because beyond that a bankruptcy can have quite a few unpleasant consequences. Customers who are still owed money may lose it in whole or in part. Moreover, they have to deal with a new energy supplier that may well offer less favourable energy contracts.
Customers keep receiving energy
When a bankruptcy is declared, a receiver is appointed who must wind up the bankruptcy. The receiver must collect as much money as possible to pay the creditors. The customers of an energy supplier also have value and can be sold. The receiver is given a period of up to twenty working days, the so-called window period, to sell the customer base to another energy supplier. During this period customers are not allowed to switch.
If the receiver does not succeed in this, the standard residual allocation scheme is applied automatically. The customers are then automatically transferred to other energy suppliers, which are obliged to accept them. Customers do not have to do anything themselves for this and receive a message from the energy supplier to which they have been allocated. This residual allocation takes place in proportion to the number of small consumers the energy suppliers have. Larger energy suppliers are therefore allocated more customers than small energy suppliers. This residual allocation is coordinated by the national grid operators. With this transfer, the new supplier will apply its own terms and rates.
A special situation arose at ENSTROGA. The energy supplier had unilaterally terminated the energy contracts of about 300 customers because they did not agree to a proposed price increase. Because these contracts were wrongly terminated, they too fall under the residual allocation scheme. These customers are therefore also automatically assigned a new energy supplier.
As a customer of a bankrupt energy supplier, it is not possible to choose a new energy supplier yourself. However, transferred customers are not obliged to stay with the assigned energy supplier. They can simply cancel the new energy contract. A notice period of 30 days then applies.
In exceptional cases the ACM can allow a deviation from the standard residual allocation scheme. That can be the case, for example, if two licence holders are part of the same group and one licence holder wants to take over the customers of the other licence holder. For the continuity of the service and in the interest of the customers, it is often better for a sister company or a subsidiary to take over the customers. Energy suppliers must request an exception themselves. The ACM assesses this case by case.
Contract terms may be less favourable
When customers are transferred to another energy supplier, the new energy supplier does not have to offer them the same energy contract. Customers who, before the rising energy prices, had a favourable energy contract with their now bankrupt energy supplier are now tied to energy contracts with higher energy prices. They are free to switch to another energy supplier, but there too the new rates of course apply. As a result, these customers will now have to pay more for their electricity and gas.
Paying outstanding invoices
When an energy supplier is declared bankrupt, the receiver will collect all outstanding claims. The receiver will draw up the final calculation and will ask former customers to pay extra if necessary. This money is used to pay the creditors of the bankrupt company. So it is not the case that a bankruptcy means a former customer no longer has to pay the bills. What is more: a receiver acts in the interest of the creditors and claims everything he is entitled to. Whereas a company may waive certain increases for the sake of customer friendliness, a receiver will not do so.
Getting money back from the bankrupt energy supplier
With the money collected, the receiver will try to repay the creditors as much as possible. If a customer is owed money by the bankrupt company, such a customer is one of the creditors who may receive money from the receiver. A credit can arise, for example, because a customer paid instalments in advance that were too high, was still entitled to a welcome bonus or was entitled to a cashback discount.
Inherent to bankruptcy is that there is not enough money to repay all creditors. The manner and order in which the receiver pays the creditors is regulated by law. Some creditors have priority, such as the company's staff and the mortgage lender. Only if money is left over for the creditors without priority, such as the customers who bought energy there, will they receive compensation. However, there is a good chance that not enough money is left over to compensate them (in full).
Different rules for large consumers
The rules cited above apply only to consumers and small business customers. These are customers who have a gas connection of at most 40 cubic metres per hour or an electricity connection of at most 3 x 80 A. Supply to large consumers does not fall under the ACM licensing system and the previously described standard residual allocation scheme is not applied to it. This is relevant, among others, for the customers of Sepa Green Energy, which also supplied large consumers. Without going into further detail, these large consumers can however also count on a continuous supply of gas and electricity. TenneT (electricity) and GTS (gas) ensure through a separate procedure that these large consumers keep receiving energy.
Energy supplier goes bankrupt: information & consequences
When an energy supplier goes bankrupt, this has major consequences for the customers. Read here what these consequences are and what to do.
03Frequently asked questions about energy suppliers and bankruptcies
If an energy supplier goes bankrupt, it quickly raises a lot of questions. It is of course anything but pleasant, especially if your energy supplier still owes you money and you may well have lost that money. It probably will not ease the pain, but it is good at least that your questions are answered.
For this you need to contact the receiver appointed by the court. The receiver maps out all claims submitted. In addition, the receiver will sell assets, collect debts and draw up an order in which everyone is paid out. If money is left over after paying the so-called preferential creditors, you will be awarded part of your claim. If you pay by direct debit, it is also possible to ask the bank to reverse the direct debit. This is also sometimes called a chargeback and can be done for the period of the last eight weeks. This prevents your advance payments from being too high without you getting the difference refunded. Do bear in mind that a chargeback can have some consequences, because you may, for example, end up in payment arrears and extra costs may be charged. Whether or not a chargeback is wise has to be assessed case by case. It is advisable to call in an expert for this, for example through your legal expenses insurance or through the Juridisch Loket.
What can I do if I am still owed money by my bankrupt energy supplier?
Various situations are possible. For example, the receiver may find an energy supplier that wants to take over your current energy supplier or the customer base. It is also possible that you are automatically allocated to one of the energy suppliers in our country. In any case, the new energy supplier will inform you of this and you can switch to an energy supplier of your choice with a notice period of at most 30 days.
My energy supplier is bankrupt. Who will be my new energy supplier?
Yes. The appointed receiver needs these meter readings to draw up the final bill. On this basis, the receiver can determine whether you still have to pay money or whether you are entitled to a refund, which you may then not receive. If you have a digital meter and gave the grid operator permission to read it, you do not need to do anything and everything happens automatically.
The bankrupt energy supplier is asking for my meter readings. Do I have to provide them?
In a bankruptcy, the court rules that a company has debts and can no longer pay them. If the company were to muddle on, the mountain of debt would only grow. That is why it is better to declare the bankruptcy and appoint a receiver. Both the creditors and the company itself can ask the court to declare bankruptcy. Once a court has declared a company bankrupt, the directors may no longer decide for themselves about the company's money and goods. The court appoints an independent receiver who must follow all sorts of legal rules. The receiver will sell the company's goods and pay out the creditors in a legally determined order. It is possible that you will be disadvantaged by this.
What is a bankruptcy and why am I disadvantaged by it?
No, there is no compensation fund for energy suppliers that go under. Nor, for example, is energy tax or VAT that has been overpaid reimbursed. At the same time, the Belastingdienst often has priority in a bankruptcy, which leaves less money to pay customers' claims. The Rijksoverheid did previously decide to partly compensate for the rising energy bill with lower tax and an extra discount. As a result, an average household would get a discount of about 400 euros on energy consumption in 2022. This corresponds to a discount of about 33,33 euros per month.
Will I get compensation from the government if an energy supplier goes bankrupt?
Here, account must be taken of the so-called secured creditors, creditors who can assert specific rights outside this order of priority. For example, a mortgage lender can claim the collateral, for example a warehouse building, and use the proceeds to claim its own mortgage claim. Holders of a right of pledge, for example on the stock, can also assert their right first. Everything that is left over is then distributed according to the order of priority below. This order of priority is regulated by law. The higher in the order someone is, the greater the chance that this creditor will be paid. The first rank includes the so-called estate claims. These include, among other things, the receiver's fee and the rent paid from the day of the bankruptcy. Next come the preferential claims. These include, among other things, the employees who are still owed wages, but also the claims of the Belastingdienst and the UWV. Only after that come the unsecured claims, the claims without any priority. These are, for example, the customers of an energy supplier who paid too much in advance payments. If money is left over for the unsecured claims, everyone gets a small share. This is determined as a percentage. If enough money is left over to pay, for example, 12% of the unsecured claims, someone with a claim of 200 euros will still be paid 24 euros. Someone with a claim of 400 euros then gets double, and so on. Often, however, very little to nothing is left to compensate these creditors.
Who has priority in the payment of claims after a bankruptcy?
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