Bussines Archives - Britannia Daily

An energy supplier serving 12,000 homes could go bust within hours after racking up millions in debts and being slapped with a £1.5 million fine by the industry regulator. Tomato Energy filed a notice of intent to appoint an administrator nine days ago, The Sun can reveal, meaning the company has until tomorrow to resolve its financial crisis or face formal insolvency proceedings. The struggling supplier was already banned from taking on new customers in April after accumulating £3 million in debt, and has since failed to address the financial problems that led regulators to threaten it with losing its licence entirely. Clock Ticking on 10-Day Deadline When companies file a notice of intent to appoint an administrator, they typically have 10 days to fix their problems before formally entering administration. With Tomato Energy having filed that notice nine days ago, the deadline expires imminently - potentially as soon as tomorrow. If the company hasn't paid off its debts or secured emergency funding within the next 24 hours, an administrator will likely take control of the business. The administrator's role would be to either rescue the company through restructuring or wind it down whilst paying as many creditors as possible from whatever assets remain. Banned From New Customers Since April Tomato Energy's troubles began months ago when regulators discovered the company had accumulated £3 million in debt whilst failing to maintain adequate financial reserves. In April, the supplier was banned from acquiring new customers as Ofgem grew increasingly concerned about its ability to meet obligations. The regulator warned at the time that Tomato Energy's financial instability could ultimately result in higher bills for its existing 12,000 customers. £1.5 Million Fine for Breaking Rules Rather than improving its financial position, Tomato Energy's situation has only deteriorated since the spring. On 13 October, Ofgem announced the supplier could face a £1.5 million fine for breaking the financial rules required to operate as an energy company. The proposed penalty relates to Tomato Energy's failure to maintain sufficient capital reserves - a fundamental requirement designed to protect consumers. Customers Won't Be Cut Off Despite the company's imminent collapse, Ofgem has reassured Tomato Energy's 12,000 customers that they will not lose their gas or electricity supply. "Even if your supplier were to go bust they would not be cut off," an Ofgem spokesperson confirmed. The regulator's safety net system ensures that when energy companies fail, customers continue receiving power without interruption. Automatic Switch to New Supplier If Tomato Energy does enter administration, affected households will be automatically transferred to a new supplier chosen by Ofgem. However, customers typically find themselves placed on "deemed" contracts with their new supplier, which are often more expensive than standard tariffs. The good news is that customers are never locked into these deemed contracts and can switch to a better deal or different supplier at any time without penalty. Credit Balances Protected One major concern when energy companies collapse is what happens to credit balances - money customers have already paid but not yet used. Ofgem's safety net protects these credit balances, meaning customers won't lose money they've paid in advance even if their supplier goes bust. This protection proved crucial during the energy crisis when dozens of companies failed, leaving millions of households in limbo. Recent Example: Rebel Energy The most recent example of this process in action came in April when Rebel Energy went out of business, affecting 80,000 customers. Ofgem quickly switched all those households over to British Gas, ensuring nobody lost their electricity or gas supply during the transition. The smooth handling of Rebel Energy's collapse demonstrates that whilst company failures are disruptive, the regulatory safety net works to protect consumers. Smaller Suppliers More Vulnerable Tomato Energy's troubles reflect a broader pattern in the UK energy market where smaller suppliers often offer cheaper deals than the Big Six but face greater financial fragility. These smaller companies operate on thinner margins and have less financial cushion to absorb shocks from wholesale price movements or operational problems. During favourable market conditions they can undercut larger competitors, but when conditions turn difficult they're often the first to fail. Energy Crisis Carnage At the height of the energy crisis, the UK witnessed unprecedented carnage in the supplier market with 30 firms collapsing in less than a year. Over two million households found themselves needing new suppliers as companies fell like dominoes. Well-known names including Bulb, Zog Energy, Together Energy and Orbit were among those that went under during the crisis. New Rules Aim to Prevent Collapses To prevent a repeat of the energy crisis chaos, Ofgem now requires all energy suppliers to maintain financial safety buffers. These reserves ensure companies are better prepared for tough times, whether caused by wholesale price spikes, operational losses or other financial pressures. The stricter capital requirements have made it harder for undercapitalised companies to enter or remain in the market. Fewer Failures Since Rule Changes Since Ofgem introduced the enhanced financial requirements, significantly fewer energy companies have collapsed compared to the crisis period. The new rules appear to be working as intended, filtering out financially weak suppliers before they can accumulate massive debts. However, Tomato Energy's case demonstrates that some companies still manage to get into trouble despite the stricter regulatory regime. Warning Signs Ignored Tomato Energy's trajectory suggests the company ignored or couldn't address clear warning signs about its financial health. Being banned from taking new customers in April should have served as a wake-up call that fundamental changes were needed. Instead, the company continued struggling for another six months, accumulating more debt and ultimately facing a substantial regulatory fine on top of its existing problems. What Happens Next With the administrator notice deadline expiring imminently, Tomato Energy faces three possible outcomes. First, it could somehow secure emergency funding or debt forgiveness to stave off administration - though this seems increasingly unlikely given the timeline. Second, an administrator could take control and attempt to restructure the business, potentially selling it to a larger supplier. Third, and perhaps most likely, the company could be wound down with its 12,000 customers transferred to a larger supplier chosen by Ofgem. Customers Should Monitor Situation Tomato Energy's 12,000 customers should watch for communications from both their current supplier and Ofgem about what happens next. If the company does enter administration, households will receive instructions about the transfer process and information about their new supplier. Those with credit balances should check these are correctly transferred to their new account, though Ofgem's protections mean the money shouldn't be lost. As the clock ticks down on Tomato Energy's final hours as an independent supplier, the real test will be whether Ofgem's improved safety net can handle the company's failure smoothly and protect its 12,000 customers from disruption. Follow for more updates on Britannia Daily

Bussines

Tomato Energy on Brink of Collapse as 10-Day Administrator Notice Expires Tomorrow

About Us

Trending This Week

Useful Links

Newsletter