Tonik Energy latest supplier to cease trading
Tonik Energy has become the latest household supplier to go bust, with 250 employees set to lose their jobs.
The Birmingham-based company’s 130,000 customers will be protected by regulator Ofgem and passed on to a new supplier.
Last week, Ofgem said seven small British energy suppliers, including Tonik, owe a total of £34m, urging them to pay up by the end of October.
Tonik collapsed owing the regulator £8.8m in payments, which relate to government-imposed renewables obligations and tariffs to help fund renewable energy generation.
The combination of a squeeze on profits caused a new price cap, a crowded marketplace and now the pandemic means that the firm is the ninth energy supplier to go bust in the last 12 months.
Last month council-owned brand Robin Hood Energy was bought by British Gas after falling into heavy debt.
Will Owen, energy expert at Uswitch, said: “There were warning signs last week as Ofgem started the process of pursuing Tonik Energy for £8.8m owed due to Renewable Obligations and other payments.
“Many energy companies, particularly the smaller challenger brands, operate on thin profit margins.
“The Covid-19 lockdown has also resulted in many customers delaying or missing payments, leaving some suppliers without the cashflow to keep going day-to-day.
Philippa Pickford, director of retail at Ofgem, said: “Tonik Energy customers do not need to worry, as under our safety net we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected.
The industry body advised customers not to switch accounts until a new supplier had been chosen.