A BIG energy supplier could be shut down after Ofgem banned it from taking on new customers.
Back in April, the energy regulator said the firm, which has 12,000 customers, could not take on any new business after it racked up debts worth £3million.
At the time, Ofgem said it had imposed a “sales ban” on the company because it has not maintained “sufficient levels of capital and liquidity”.
The regulator also said if the energy company failed to pay its debts, it could end up passing the costs onto customers through higher bills.
Therefore, it issued a provisional order against the company.
This banned it from taking on new customers, carrying out any marketing and providing loans or credit to customers.
But the regulator has now issued the firm with a “notice of failure to comply with a confirmed provisional order” – meaning it is not meeting the requirements of its order.
A notice released by Ofgem on September 10 said the firm failed to “obtain and maintain liquidity of a sufficient amount”.
The regulator also said that the notice explains that if this failure is not rectified within three months Ofgem may at “any time revoke Tomato Energy’s Electricity Supply Licence” subject to giving no less than 30 days’ notice.
Ofgem is looking to get Tomato to complying with their legal obligations.
The Sun has approached Tomato Energy for comment.
The troubled firm has not accepted new customers since Ofgem issued its initial ban.
The energy supplier’s website reads: “We are temporarily not accepting new registrations or providing quotes for new customers.
“Please check back for later updates.”
Tomato customers are within their rights to switch at any point, but it is worth looking at any exit fees that may kick in if you do decide to change supplier.
Ofgem makes sure that companies are held accountable and that households will be protected when suppliers go bust.
Earlier this year, the group stepped in when energy firm Rebel Energy suddenly went bust.
Its collapse left 80,000 households in the UK without a supplier, meaning the energy regulator had to make sure their supply was not disrupted.
Rebel Energy customers were then moved over to British Gas.
Last year, Ofgem introduced new rules aimed at preventing more companies from going bust.
Under the new rules, energy firms must have a minimum financial buffer so they can better withstand market disruption.
The new rules were imposed after 30 companies went bust in less than a year at the height of the energy crisis.
Is it safe to switch to a small energy provider?
FED-UP with sky high energy prices and poor customer service from the Big Six energy firms? Then you could save a packet by switching to a smaller firm.
Research from Which? has found customers with smaller and medium sized firms like Utility Warehouse, Flow Energy and Octopus Energy are much happier than those with the major firms – and could save a whopping £333 a year by switching.
The biggest risk of choosing a small provider – like Our Power – is that it goes bust.
But remember that if the firm does go under you won’t be cut off, and Ofgem will try and get a new supplier in place as quickly as it can.
Once it has done this, the new firm will contact you – it doesn’t have to honour the deal you were on with defunct firm – but under Ofgem rules any credit you have on your account is protected.
If you’re unhappy with the new supplier’s offer you are free to shop around for a new deal and switch – you won’t have to pay any exit fees to leave.
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