Economy Energy, an energy supplier with about 235,000 domestic customers, has ceased to trade, this follows last week’s news that it had been by banned by Ofgem from taking new customers.
Under Ofgem’s safety net, the energy supply of Economy Energy’s customers will continue and prepayment meters can be topped up as normal. The outstanding credit balances of domestic customers will be protected.
Ofgem will choose a new supplier to take on Economy Energy’s customers.
Philippa Pickford, Ofgem’s director for future retail markets, said “Our message to energy customers with Economy Energy is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected. Ofgem will now choose a new supplier for you, ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.”
“We have seen a number of supplier failures over the last year and our safety net procedures are working as they should to protect customers.”
Ofgem previously opened three enforcement investigations into Economy Energy, two of which will now close. The investigation into whether Economy Energy, E and Dyball Associates have infringed Chapter I of the Competition Act 1998 will remain open.
Last week, Ofgem issued a provisional order to Economy Energy, which prevented the supplier from taking on new customers.
Commenting on the collapse of Economy Energy, Peter Earl, Head of Energy at comparethemarket.com, said “This is starting to look like the winter of discontent for some smaller energy providers. Another month, another poorly financed energy company collapses. The rise in wholesale gas and electricity prices is really hurting those suppliers who have not adequately hedged themselves against such market hikes. Ofgem’s ban on acquiring new customers may have sounded the death knell for this supplier.”
“This failure will naturally concern its 235,000 customers – but they shouldn’t worry. Ofgem will secure them a new supplier swiftly and ensure that there is no impact of their energy supply. With Economy Energy joining a long list of failed energy companies, it is vital that Ofgem introduces its new safeguards as soon as possible, to ensure that every company is stress-tested against shock energy market hikes. We hope that this is the first and the last energy company to go bust in 2019 – but we fear this is only the start.”
Gillian Guy, Chief Executive of Citizens Advice, said “The failure of energy suppliers is becoming an all too familiar story. Ofgem’s moves to tighten up the licensing rules should address the problem of unprepared companies coming into the market. But the continued failure of suppliers shows there are firms operating that require the regulator’s urgent attention.”