AN energy supplier could go bust within days after building up huge debts and being hit with a £1.5million fine from the regulator.
Tomato Energy, which was banned from taking on new customers in April after racking up £3million in debt, has now filed for an administrator to take over.
Filing a notice of intent to appoint an administrator typically means a company has 10 days to fix its problems before it officially goes bust.
Tomato Energy filed the notice nine days ago, The Sun can reveal.
It means the company, which supplies about 12,000 homes, could fail as soon as tomorrow.
If it doesn’t pay off its debts in the next 24 hours, an administrator will likely take charge.
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The administrator’s job is to try to save the company or pay as many debts as possible.
If the business still can’t be rescued, it will shut down for good.
Tomato Energy was contacted for comment.
In April, energy regulator Ofgem banned Tomato Energy from signing up new customers after the firm built up £3million in unpaid debts and ran out of money.
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Ofgem said Tomato Energy was not keeping enough cash in reserve and warned its financial troubles could lead to higher bills for existing customers.
Since then, Tomato Energy failed to fix these problems and now faces losing its licence.
On October 13, Ofgem said Tomato Energy could face a £1.5million fine for breaking the financial rules needed to run an energy company.
Ofgem wouldn’t comment on speculation surrounding a supplier’s financial position.
However, it reassured customers that even if your supplier were to go bust they would not be cut off.
If your energy company goes bust, Ofgem’s safety net means your supply continues and your credit balance is safe.
You’ll be automatically switched to a new supplier, though you may move to a “deemed” contract, which can be more expensive.
However, customers are never locked into the deemed contract and can change tariff or supplier at any time.
Is it safe to switch a small energy supplier?
FED up with high energy bills and poor service from the Big Six suppliers?
You could save up to £333 a year by switching to one of the smaller firms, which customers rate much more highly, according to Which?.
The main risk with a smaller supplier is that it might go out of business.
But if this happens, you won’t lose your supply – Ofgem will quickly move you to a new company and your account credit will be safe.
You don’t have to stay with the new supplier or accept their prices—you can shop around for a better deal at any time, without paying any exit fees.
In April, when Rebel Energy went out of business, Ofgem made sure its 80,000 customers weren’t left without electricity or gas.
The regulator quickly switched everyone over to British Gas, so no one lost their supply.
Smaller energy companies can often offer cheaper deals than the Big Six, but they’re also more likely to go out of business.
At the height of the energy crisis, 30 firms collapsed in less than a year, leaving over two million households needing new suppliers.
Names like Bulb, Zog Energy, Together Energy and Orbit were among those that went under.
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To prevent this happening again, Ofgem now requires all energy suppliers to keep a financial safety buffer, so they’re better prepared for tough times.
Fewer companies have collapsed since these new rules were introduced.
What energy bill help is available?
There's a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.