Regulator steps in as energy company collapses

The UK energy market saw 28 companies fold in 2021 after a surge in wholesale prices

An energy supplier has collapsed, leaving the industry watchdog to step in to ensure supplies for the provider's 15,300 household and 8,400 business customers.

Customers of Basingstoke-based Tomato Energy have been advised not to switch as they will be contacted by a new supplier, which will be allocated by Ofgem in the coming days.

The regulator said energy supplies and funds paid into accounts, including credit balances, would be secured for customers.

Residents were advised to take a meter reading before they were contacted by their new suppliers.

Ofgem said household customers would also continue to be protected by the energy cap when switching to the new supplier.

The regulator began its investigation into Tomato Energy in April and in October it Imposed a Financial Penalty of £1.5m on the firm, which had been found to have broken Ofgem's rules.

Rohan Churm, director for financial resilience and control for Ofgem, assured customers it was "working quickly to appoint a new supplier".

Energy crisis

The global energy crisis caused by a combination of factors, primarily the Covid-19 pandemic and the war in Ukraine, exposed weaknesses in the energy market.

In 2023 Ofgem tightened rules, requiring suppliers to hold more capital and ring-fence customer credit, to prevent collapses - despite this smaller companies have still failed.

Ofgem also introduced its Supplier of Last Resort (SoLR) system earlier this year.

It is an emergency mechanism that ensures that customers of a failed energy supplier are seamlessly transferred to a new one.