When a supplier stops trading, Ofgem appoints a replacement. This is the Supplier of Last Resort process and it usually takes a few days. Your gas and electricity keep flowing. Your account moves across on its own.

But your contract doesn't move with it. Whatever rate you agreed no longer exists, along with your old supplier. Until you agree a new deal you sit on a deemed contract, one you never chose and never signed. For businesses, deemed rates are typically among the dearest on the market. Households have a ceiling, because the price cap applies to the tariff you're moved onto, but it will usually still cost more than the deal you lost. Either way, stay active through this process: you don't want to overpay for something within your control.

What's handled for you

Ofgem asks surviving suppliers what they would need to take on the failed company's customers. It picks one. That supplier then sends a letter to you.

You don't need to do anything for the transfer itself. Your supply carries on, because the gas and electricity reaching your meter has nothing to do with who sends the bill. Domestic credit balances are honoured by the new supplier, and Ofgem confirms there are no exit fees for switching away from the supplier it appoints.

The process works. Your price is the part that needs attention: the moment the transfer completes you are free to switch or negotiate, and the sooner you do, the sooner you stop paying a premium.

The first 48 hours

  • Photograph both meters. Do it as soon as possible. A dated photo of your readings settles any argument about your closing balance, and those arguments are common after a failure.
  • Screenshot your account. Log in and save your balance, your recent bills and your tariff details. Online accounts often go down quickly.
  • Don't switch during the handover, but plan to. Wait until Ofgem has named your new supplier and the transfer is complete. Citizens Advice warns that switching before your account has moved can make it harder to get back any money you're owed. This pause is temporary and the only time you should sit still: once you're moved across, that's your cue to act.
  • Leave your direct debit alone. You don't need to cancel it: your payment details move to the new supplier and the old direct debit ends on its own. If you'd rather cancel, wait until your new account is up and running.
  • Be wary of phone calls. Scammers target supplier failures. The real supplier will write to you. It won't ring asking for your bank details.

What's protected, and what isn't

Ofgem's safety net doesn't cover them: the regulator will try to appoint a supplier willing to cover some or all of what you're owed, but there's no guarantee. If the new supplier doesn't pay out, you join the queue of unsecured creditors, and what you get back depends on what the administrators recover. It is often very little.

Deemed rates cost you money

Deemed rates apply when there's no agreed contract. They're priced for a customer the supplier knows nothing about, so they carry the cost and risk of taking someone on at short notice. For households there's a limit to the damage, because the price cap covers customers moved under the Supplier of Last Resort process. For businesses there's no cap, and deemed and out-of-contract rates sit at the top end of what a supplier charges.

You go onto them the day your account transfers. The problem is that people stay on them. The transfer feels like a job that's been dealt with: the lights are on, bills arrive and months pass.

Two things to know. Once the transfer is complete, you can negotiate or switch with no exit fee. And every day on deemed rates costs more than it needs to. For a business of any size, that can run into thousands of pounds over a few months.

So use the waiting time to prepare, not to act. While the transfer completes, gather your usage figures and start comparing the market, but don't begin an actual switch until you've been moved across. The moment the transfer is done, go to the market and act. Don't simply take the first offer from the appointed supplier: it took your account involuntarily and owes you nothing.

If you run a business

Register your claim with the administrators as soon as they're named, using the evidence you saved.

Check your metering. If you're half-hourly, confirm your data collector and meter operator arrangements came across properly. They sit alongside the supply contract, and when they don't transfer cleanly the billing problems show up weeks later.

Put a date in the diary for sorting your new contract, and treat it as a deadline. Or send a picture of your bill to Purely Energy and we'll take it from there.

Why suppliers fail

The 2021 collapse was a market-wide shock. The National Audit Office  put the rise in wholesale gas at nearly six-fold between February and December 2021, while the price cap limited what suppliers could charge, and counted 28 supplier failures from June 2021 onwards. Firms that hadn't bought their energy in advance ran out of cash. Being well run didn't help much. We keep a list of every supplier that has gone bust since 2018.

Failures now are different. Since 31 March 2025 Ofgem has required domestic suppliers to keep their net assets above zero, in effect a ban on trading with negative equity, and set a capital target of £115 for every dual-fuel customer. Fall below the target and restrictions follow, including bans on taking new customers. Failures are rarer, and when one happens there's usually a specific reason.

Tomato Energy is the recent example. It stopped trading on 5 November 2025. It sold contracts with no standing charge, but the network costs attached to every connection don't vanish because a supplier stops listing them separately. On low-usage sites, those contracts lost money. We covered why Tomato Energy went bust and what it means for you at the time, and  Rebel Energy's failure seven months before it.

Warning signs

If you're searching things like 'energy company gone bust today' or 'is my energy supplier going bust', it's worth knowing what actually points to trouble.

  • A worried search isn't proof either way, but a few signs are.
  • A price well below everyone else, with no explanation. There's usually a mechanism. If nobody can name it, assume the supplier is absorbing the cost.
  • A structure that removes an unavoidable cost. No standing charge on a low-usage site is the classic one.
  • Regulatory action. Ofgem publishes provisional orders, consumer redress orders and bans on taking new customers. A ban on new customers matters most, because it cuts off the cash a struggling supplier depends on. Ofgem's first provisional order against Tomato  came nearly seven months before it failed.
  • Service getting worse. Late bills, unanswered calls and trouble switching away often come first.
  • A new name or a short history. Neither is damning. Both make a track record harder to check.
  • A failure costs you the rate you signed up for, a spell on deemed rates and a fortnight of admin. That's why price on its own is a poor way to choose.

How Purely Energy can help

We watch supplier financial reporting and Ofgem enforcement as a matter of routine. If your supplier has failed, we'll tell you where you stand, deal with the appointed supplier and take you to market so you're not left on deemed rates. We're ISO 9001 certified and a certified B Corp, both independently audited, and we show you our margin on every tariff we quote. Call us on 0161 521 3400 or email info@purelyenergy.co.uk