An energy provider serving approximately 12,000 households is on the verge of collapsing, as disclosed by reports. Tomato Energy has taken steps to appoint an administrator, indicating its imminent administration process. This action initiates a temporary legal halt preventing creditors from pursuing legal actions for a period of ten days. The company’s mounting debts of £3 million led to a prohibition on accepting new customers by energy regulator Ofgem in April. In recent developments, Ofgem warned Tomato Energy of a potential £1.5 million fine for failing to meet financial obligations. If an administrator assumes control, efforts will be made to facilitate debt repayment.
In cases where a company cannot be salvaged, closure becomes a possibility. Ofgem has historically overseen the transfer of customers to alternative suppliers when energy providers collapse, ensuring minimal disruption to energy services. The ongoing rise in energy costs is exemplified by the recent increase in the Ofgem price cap from £1,720 to £1,755 for a standard dual fuel household paying via direct debit. This price cap remains effective until December 31, subject to periodic updates. Customers on standard variable rate (SVR) tariffs are shielded by the Ofgem price cap if not under a fixed-rate agreement.
While the price cap governs the maximum charges for gas and electricity units, actual bills are influenced by individual energy consumption levels. It encompasses both energy unit costs and fixed daily standing charges for network access. The price cap reflects projected annual expenses for an average consumption household, based on assumed electricity and gas usage levels.