- Ofgem warned more suppliers could go under
The boss of British Gas owner Centrica has warned more energy suppliers could implode as his firm takes on 23,000 customers from a stricken rival.
Tomato Energy collapsed last week leaving regulator Ofgem to step in to protect its 15,000 household and 8,000 business customers who have now been switched to British Gas.
It came as the watchdog gave Ovo – one of Britain’s largest suppliers – more time to comply with new financial rules intended to prevent a repeat of the wave of failures since 2021 as gas prices surged following the invasion of Ukraine.
But Centrica chief executive Chris O’Shea criticised Ofgem over its handling of the situation and said more needed to be done to ensure suppliers are financially robust.
‘Tomato’s demise marks the 31st supplier to collapse since 2021,’ he said.
‘Ofgem’s inaction on financial resilience has left customers exposed for too long.
Centrica chief executive Chris O’Shea says Ofgem must ensure energy suppliers are robust
‘Urgent reform is needed. Ofgem must ensure all suppliers are robust, comply with capital adequacy rules, and ring-fence customer funds to prevent this cycle from repeating.
‘Recent reports suggest Ofgem has relaxed the rules for large suppliers in financial distress, even as Tomato was allowed to fail. We need greater transparency to understand what is happening, enabling customers to decide whether suppliers deserve their trust.’
Tomato Energy was banned from taking on new customers in April after building up debts of £3m.
It was then hit with a proposed £1.5m fine from Ofgem last month for failing to meet financial resilience rules and the firm filed a notice of intent to appoint administrators at the end of October.
The latest collapse comes after Rebel Energy went bust in April with 80,000 household and 10,000 business customers.
Ofgem said energy supplies for existing Tomato Energy customers would continue as normal after they were switched over to British Gas on Sunday.
Any funds in the accounts of current and former domestic customers of the supplier would be protected, where they are in credit.
Domestic customers would also be protected by the energy price cap with their new supplier.
Tomato Energy customers will be contacted over the coming days about the changes, the regulator said.
Those who wished to switch supplier could shop around but were advised to wait until the transfer had been completed.
Customers will not be charged exit fees if they decide to switch to another supplier.
It is understood the company, which employs around 100 people, will formally appoint administrators in the coming days.
Rohan Churm, director for financial resilience and controls at Ofgem, said: ‘Minimising the disruption to customers is our top priority when a supplier exits the market, so I am pleased to confirm British Gas has been appointed to take on customers of Tomato Energy, and will work to move their accounts in the coming days and weeks.
‘While I know customers may be concerned, they do not need to worry – any domestic credit balances are protected and there will be no interruption to their supply during this period.
‘Tomato Energy customers will be placed onto a competitive tariff, and when the switch is complete they can consider what’s right for them and can shop around for other deals. They will also face no exit fees if they choose to switch to another supplier.’
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