Ofgem appoint Octopus as Iresa ceases trading

For the 90,000 customers of failed energy firm Iresa, news they have a new supplier can't come soon enough. Appointed by Ofgem, renewable energy company Octopus have taken control of all ex-Iresa accounts as of the early hours of Wednesday 7th August.

Ofgem are assuring customers that credits will be honoured, and that energy supply will not be interrupted. They say customers can expect to hear from their new supplier within a few weeks with details of their new tariff and contract, which they're welcome to switch.

The announcement comes following the news that Iresa ceased trading on July 27th, after months of problems and complaints regarding their service.

What went wrong for Iresa?

Small energy firm Iresa was banned from taking on new customers earlier this year, following serious issues with customer service. Many of their customers complained of unexpected increases to direct debits, long call waiting times and radio silence on their social media channels. The Ofgem ban was the beginning of the end for this small supplier.

Originally in force from March, the ban was due to be in place for three months, to give the supplier a chance to sort out their customer service issues. However, after the three months had passed, Iresa had failed to meet the required improvements set by the regulator, and had the ban imposed indefinitely.

Since its initial launch, tariffs from Iresa have looked suspiciously low. Martin Lewis commented months ago that their pricing strategy was 'unsustainable', suggesting that they may have been in the 'bait and switch' energy supply game.

Lewis also suggested that this latest collapse of a small supplier was symptomatic of a wider problem in the energy market. He thinks that encouraging new entrants to the market is good for competition, but that there are not enough checks being done on firms before licenses are granted.

In line with this opinion, Ofgem launched a review in June this year to revisit the way they license energy suppliers. Outcomes of this review will likely see new entrants to the market undergoing rigorous financial health checks.

What will happen to Iresa's customers?

Customers of the failed energy firm won't be left with no energy supply. Under Ofgem's 'safety-net' rules, supply will be continued, and credit balances protected. The regulator has already appointed another firm, Octopus Energy, to administer the 90,000 account holders who were supplied by Iresa. They have advised customers that:

• Energy supply will be continuous
• Electricity will have been switched to Octopus from 00:01am on Wednesday 1st August
• Gas will have switched at 05:01am on the same day
• The tariff will be the 'Flexible Octopus' tariff, which is the suppliers cheapest but probably more expensive than their previous agreement with Iresa
• Octopus will contact customers by 14th August to confirm tariff and contract details
• Octopus will pay back any credit account holders may have had with Iresa

Advice for customers who are facing this transfer of these services is that they should wait until they are sure they are switched to Octopus before hunting for a new deal. Once switched, Octopus say they are free to shop around with no exit fees incurred, if they wish to do so. Taking a meter reading can help to prevent any billing dispute during this switch over period.

Although a relatively new firm, Octopus energy have performed well in their opening two years. 250,000 customers have already joined the service, which offers a unique 'tracker tariff', helping customers to benefit when the wholesale price of gas and electricity falls.

Ofgem have put together a page of information for ex-Iresa customers, answering many of the questions raised about the switch. Octopus are also providing information via the web, but have asked customers not to call or email yet. Instead, they are blogging daily to keep customers informed of progress.