Thousands of UK homes affected as small energy supplier goes bust

In a stark reminder of the fragility within the UK energy market, home-supplier Tomato Energy has ceased trading, leaving around 15,300 households and 8,400 businesses affected.

Here's a deeper dive into what's happened, how consumers are affected, what protections are in place, and what lessons we should learn going forward.

What happened, exactly?

Tomato Energy, a smaller supplier in the UK market, has entered liquidation. According to a filing with regulators:

The company had been placed under regulatory scrutiny after facing financial instability.

It reportedly accrued debts of the order of £3 million and faced a fine of about £1.5 million from the regulator Ofgem.

Having tried and failed to find a rescue deal or merger, the supplier has stopped trading and customers are being transferred under the “supplier of last resort” (SoLR) mechanism.

It is important to note, while this supplier is relatively small, a wider pattern of smaller failures has become increasingly common in recent years within the UK.

How are customers affected?

For the households and businesses supplied by Tomato Energy, the following are key impacts:

1. Continuity of supply

The good news: customers will not have their energy cut off. Ofgem ensures that when a supplier fails, the customers are transferred to another supplier under the SoLR process. So supply continues uninterrupted.

2. Tariffs and cost

While your supply continues, the tariff you are moved to may change. In many cases:

You will be put onto a "deemed contract" with the new supplier, which may not be as good as the one you were on previously.

You are free to switch to another supplier-with no exit fees-once the new supplier is in place, but it may take some time to arrange the switch.

3. Credit balances

If you were in credit with Tomato Energy, you should be protected. Ofgem has said that customer credit balances are safe and will transfer to the new supplier.

4. Further steps for customers

If you are a customer of Tomato Energy - or any failed supplier - you should:

Wait to be contacted by the new supplier. You shouldn't change suppliers during the transfer process unless instructed otherwise.

Take a meter reading at the time of transfer to ensure you don’t overpay or underclaim.

Review your tariff once you're moved, and shop around for a better deal if one is available.

Keep records of correspondence with both the old supplier and the new one.

Why are energy suppliers collapsing?

This event with Tomato Energy isn't isolated. There have been many supplier failures in the UK energy market in recent years. A number of the root causes include:

Increasing wholesale energy costs

Wholesale markets are where energy suppliers purchase fuel, such as gas and electricity. Wholesale prices have soared in recent years, though often faster than the ability of companies to pass on the costs to consumers under regulatory price caps. That squeeze has made it hard for smaller firms to stay viable.

Regulatory protections and price caps

The Ofgem price cap protects consumers from excessive rates, but when wholesale costs begin to rise rapidly, suppliers — particularly challengers — struggle if they have fixed tariffs to consumers at lower prices.

Smaller companies, lower margins

Many of the firms that are failing are smaller and less established, possibly not having the financial reserve to absorb such shocks. Larger suppliers often have the capacity to spread risk over more customers and enjoy better capital buffers.

Operational and governance issues

Failures at times occur due to mismanagement, inadequate financial protections, and bad governance. Over time, a number of firms have been fined by Ofgem for failures in customer service, billing, and sustainability.

Wider implications for the market and consumers

What it means goes beyond the affected households. Here are some of the wider ramifications:

Consumer trust and stability

It is regular supplier failures that eventually undermine consumer confidence in the switching of energy providers. Competition and innovation are one thing; sustaining repeated collapse tests whether the model is viable for small players.

Tariff risk

There is even a risk of paying more when people are moved onto deemed contracts or less favorable tariffs. This all matters at a time of cost-of-living pressures, with energy bills already one of the major financial burdens.

System cost and burden on industry

When a supplier fails, there are costs to be borne by the industry and ultimately by consumers — for instance, unpaid debts may be socialized through future price caps.

Need for regulation and oversight

The role of the regulator then becomes paramount: early identification of at-risk suppliers, protection of customers, financial resilience, and perhaps reconsideration of the way price regulation and market entry are considered.

What should affected customers do now? If you're one of the thousands affected, here's a clean checklist of actions to take: Check for any official notifications. Await the letter or email from Ofgem and/or the new supplier with information on what to expect. Watch out for phishing/scam communications; confirm everything through official channels. Take a meter reading On the first day the new supplier takes over, take a meter reading to make sure your account with the old supplier can be closed accurately. Check your credit balance If you were in front on payments, make sure your credit is transferred. If you were in arrears, the new supplier may contact you regarding the forwarding of costs. Don't switch immediately It is best not to change suppliers while the transfer is in process. You can compare deals once everything is settled. Compare deals and switch if beneficial Once you're with the new supplier, check the tariff you're on. Use a trusted comparison service to see if you can get a better deal. Switching is free of exit fees in the transfer context. Budget for higher bills With tariffs likely to rise, plan your use of it, consider energy-saving measures-e.g., insulating your home, using smart meters, and reducing standby electricity-and see if you are eligible for support. Get help if necessary Special schemes are available to support people in financial difficulties: priority service registers for vulnerable customers, payment plans, and government/charity help. What should industry and regulators do? In the interests of avoiding such scenarios and to better protect consumers in the future, the following steps are warranted: Stricter financial resilience requirements Ensure that all suppliers, especially the smaller ones, maintain adequate capital buffers, risk management practices, and stress testing for wholesale shock scenarios. Faster intervention and monitoring Improve early warning systems so regulators can act before suppliers reach crisis point. Transparent communication Keep consumers informed about what happens when a supplier fails: their rights, process, timings, what changes for them. Price regulation review Rethink the interaction of mechanisms like the price cap with market volatility. If caps are too constraining on suppliers, the risk of failure increases. Consumer support Enhance energy efficiency programmes and support for the vulnerable, and ensure switching is a viable and safe option. Final thoughts The collapse of Tomato Energy raises a warning flag regarding the UK energy market. The immediate impacts are very much moderated for most households thanks to the SoLR safety net, but the fallout is not insignificant: dented consumer confidence, potential increased costs, and vulnerabilities in the system exposed. For individuals, take note: be calm, act pragmatically, meter readings, checking tariffs, comparing deals, and plan for higher bills. Whereas for industry and regulators, this all demonstrates that there will be constant pressure to ensure robust frameworks, proactive oversight, and a market which can balance competition with stability. Ultimately, energy supply is not just about tariffs and competition; it is about the delivery of a vital public service reliably, affordably, and fairly. The failure of a supplier acts to remind us that this system is only as strong as its weakest link.