Mid-sized energy supplier Tonik has fallen into administration, leaving 130,000 households in the lurch.
Ofgem's safety net means these customers will continue to receive gas and electricity as normal and the credit balances of domestic customers will be protected.
The regulator will appoint a new supplier for Tonik’s customers through its Supplier of Last Resort (SoLR) process in the next few days. Customers should wait to be contacted by that supplier. In the meantime, they should take a meter reading and hold off switching.
Philippa Pickford, retail director at Ofgem, reassured these households that they don’t need to worry. “Ofgem will now choose a new supplier for you and whilst we are doing this our advice is to ‘sit tight’ and don’t switch,” she said.
"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.”
Last week the regulator revealed that Tonik was one of seven energy suppliers which had missed a deadline for paying a collective £34 million into the Renewables Obligation (RO) fund, which supports renewable electricity generation. Tonik’s outstanding bill to the fund is £8.8 million.
Depending on how many other suppliers default on their RO payments, the outstanding balance may be mutualised across all energy suppliers, adding to all consumers’ energy bills. Last year late payments and debts left a £97.5 million hole in the fund, which added an estimated £4 to every household’s annual energy costs.
Tonik was also one of two suppliers that failed to make their annual levelisation payments into the Feed-in Tariff scheme, which pays owners of small-scale renewable generators for the electricity they produce. The other was Nottingham City Council’s Robin Hood Energy, which was recently sold to British Gas following multi-million losses.
Failure to pay green taxes is often seen as a harbinger of an energy supplier's collapse. Last year several companies which defaulted on their RO payments went bust or were sold in the subsequent months, including TOTO Energy, Breeze Energy, GnERGY and Robin Hood Energy.
Tonik Energy is the second supplier to founder during the coronavirus crisis, following small supplier Go Effortless Energy in September. However, more than 20 have exited the market since the beginning of 2018, and suppliers have cautioned that more might follow this autumn as the economic crisis deepens and households struggle to pay their energy bills.
Tonik had recently launched an energy tariff for electric vehicle drivers that separated home energy consumption from the energy used to charge the vehicles. It described the smart energy tariff as the first of its kind in the UK.
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