AN energy supplier has gone bust after building up huge debts and being hit with a £1.5million fine from the regulator.
Tomato Energy, which serves 15,300 households and 8,400 businesses, has announced that it is formally ceasing to trade.
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Ofgem said Tomato Energy was not keeping enough cash in reserve and warned its financial troubles could lead to higher bills for existing customersCredit: Refer to source
The supplier, which was banned from taking on new customers in April after racking up £3million in debt, filed an intention to appoint administrators at the end of October.
However, no rescue deal has emerged, and the company has now been forced to shut down for good.
Ofgem today reassured customers that, even though the supplier has gone bust, their energy won’t be cut off.
Rohan Churm, director for financial resilience and control, said: “I want to reassure Tomato Energy customers that they do not need to worry.
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“They will not see any disruption to their energy supply, and any credit domestic customers have on their accounts remains protected under Ofgem’s rules.
“We are working quickly to appoint a new supplier for all existing customers, and they should not switch in the meantime.
“Once appointed, a new supplier will be in touch with further information.”
If your energy firm goes bust, Ofgem’s safety net keeps your supply on and protects your credit.
Ofgem has not yet named the supplier that will take on Tomato Energy’s customers.
When one is appointed, they’ll contact you.
You don’t need to do anything.
You’ll be automatically moved to a “deemed” contract, which can cost more.
However, customers are never locked into this deemed contract and can switch tariff or their supplier at any time.
Ofgem’s Supplier of Last Resort scheme has already moved hundreds of thousands of customers from failed energy firms to new suppliers.
In April, when Rebel Energy went out of business, Ofgem made sure its 80,000 customers weren’t left without electricity or gas.
The regulator quickly switched everyone over to British Gas, so no one lost their supply.
Smaller energy companies can often offer cheaper deals than the Big Six, but they’re also more likely to go out of business.
At the height of the energy crisis, 30 firms collapsed in less than a year, leaving over two million households needing new suppliers.
Names like Bulb, Zog Energy, Together Energy and Orbit were among those that went under.
To prevent this happening again, Ofgem now requires all energy suppliers to keep a financial safety buffer, so they’re better prepared for tough times.
Fewer companies have collapsed since these new rules were introduced.
However, Rohan Churm said: “We have worked hard to improve the financial resilience of suppliers in recent years, implementing a series of rules to make sure they can weather unexpected shocks.
“But like any competitive market, some companies will still fail from time to time, and our priority is making sure consumers are protected if that happens and that any associated costs are minimised.”
Is it safe to switch to a small energy supplier?
FED up with high energy bills and poor service from the Big Six suppliers?
You could save up to £333 a year by switching to one of the smaller firms, which customers rate much more highly, according to Which?.
The main risk with a smaller supplier is that it might go out of business.
But if this happens, you won’t lose your supply – Ofgem will quickly move you to a new company and your account credit will be safe.
You don’t have to stay with the new supplier or accept their prices—you can shop around for a better deal at any time, without paying any exit fees.
What’s happened at Tomato Energy?
In April, energy regulator Ofgem banned Tomato Energy from signing up new customers after the firm built up £3million in unpaid debts and ran out of money.
Ofgem said Tomato Energy was not keeping enough cash in reserve and warned its financial troubles could lead to higher bills for existing customers.
Since then, Tomato Energy failed to fix these problems and now faces losing its licence.
On 13 October, Ofgem said Tomato Energy could face a £1.5 million fine for breaking the financial rules needed to run an energy company.
At the time, Ofgem would not comment on the firm’s finances.
The Sun then revealed Tomato had filed a notice of intention to appoint administrators in early October.
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That notice usually gives a company 10 days to find a rescue before it goes bust.
However, Tomato could not be saved and it has now chosed to cease trading.
What energy bill help is available?
There’s a number of different ways to get help paying your energy bills if you’re struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.
