Extra Energy has become the sixth energy supplier to do so since the start of the year.
Extra Energy’s 108,000 domestic and 21,000 business customers have been told that their energy supply will continue as normal and credit balances that they have will be protected.
“If you are an Extra Energy customer, under our safety net, we will make sure your energy supplies are secure,” said Philippa Pickford of Ofgem.
“Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch.
“You can continue to 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.”
Ofgem’s Chief executive Matthew Vickers said: “We are keen to work closely with whichever supplier is chosen to take on Extra Energy’s customers to help ensure a smooth transition for consumers, as we did with Octopus Energy following the collapse of Iresa in July.”
Extra Energy said that the government had made “the market unviable” through the recent introduction of an energy bill price cap.
The firm’s chief executive Nick Read said “We have tried to restructure, merge and reduce costs in order to ensure the viability of our UK business,”
“However, in light of the substantial UK regulatory change with the introduction of the price cap, we see no longterm investment opportunity in the UK market.”
Over the course of 2018, Future Energy, National Gas and Power, Iresa Energy, Gen4U, Usio Energy and Extra Energy stop trading. These firms had supplied over 225,000 customers between them.
To combat the collapse of these small firms, Ofgem is implementing tougher licencing measures, in which applicants must provide evidence of a year’s worth of funds and resources to the regulator.
These measures should be in place by the end of spring in 2019, and will also involve new suppliers to show their procedure for handling Ofgem’s complaints standards and assisting vulnerable customers.
Mary Starks, executive director for consumers and markets at Ofgem, said: “New energy suppliers that have entered the market over the last few years have offered consumers more choice and helped to drive down energy prices and drive up customer service standards.
“However, complaints against some suppliers have been rising recently and we have had to step in when others have ceased trading.
“Our proposed new tests for suppliers wanting to enter the market will ensure consumers will be better protected against the risk of poor performance, while still allowing more competition and innovation in the energy market to benefit consumers.”
Aside from the Big Six, there were 67 smaller operators as of June this year. 13 of these had entered the market from the start of 2018 to June.