Tomato energy bites it — what happens when energy companies go bust?
Tomato Energy collapsed under wholesale market pressure, exposing a broken system that keeps failing customers. Here’s how new models like RED™ are showing a better way forward.
Tomato Energy collapsed under wholesale market pressure, exposing a broken system that keeps failing customers. Here’s how new models like RED™ are showing a better way forward.
Tomato Energy incorporated on 17th August 2015, promising simplicity and savings for small businesses. Fast forward 10 years, and simplicity has long slipped out the door. What remains is an inevitable catastrophe.
Like the 51 energy suppliers who have gone bust before them, Tomato is the latest supplier to circle the drain. And every time an energy supplier comes this close to buckling, we see the same pattern emerge: unpaid debts, frozen accounts, scrambling policymakers, and customers left holding the mess.
Here’s a look at what went down with Tomato, and why a better approach to supplying energy is required to ensure you, the customer, aren’t footing the bill.
A tomato turns sour: What actually happened to Tomato Energy?
Here’s the short version: Tomato Energy couldn’t keep up with its bills, and the system (specifically, Ofgem and HMRC) decided to pull the plug.
The slightly longer version is this: In April 2025, Ofgem hit Tomato Energy with a provisional order because the company failed to meet its obligations to Elexon, the governing body that settles the UK electricity market.
Tomato owed nearly £3 million in debt. Worse, the company didn’t have the capital or liquidity to mind the gap (more of a gaping hole, if you ask us), which is a serious breach of supplier requirements.
Behind the scenes, cracks were beginning to emerge even before Ofgem stepped in, including:
A failing billing system: Reddit users were reporting missed invoices and payment confusion as far back as December 2024.
No customer support availability: Industry forums lit up with complaints in February this year about unreachable staff and missing data.
A complete pause in customer acquisition: As part of their provisional order, Ofgem banned Tomato from taking on new customers due to their mounting debt.
Then came the legal blow: HMRC filed a winding-up petition, effectively calling time on the company’s operations. (tem explainer: A “winding-up petition” is a legal document that aims to force a company into compulsory liquidation due to unpaid debts.)
Here’s the important part of this story…
Tomato didn’t collapse because of one bad decision. It collapsed because it followed the same risky playbook used by every energy supplier who came before them. It’s a playbook built on fragile margins, turbulent wholesale price swings and no real buffer to weather a light drizzle, let alone an all-out flash flood.
This story is a recurring feature of a broken system, and Tomato won’t be the last supplier to collapse before the powers that be decide something has to change.
When energy companies go bust… what happens next?
What does the collapse of yet another energy supplier mean for you? Well, it triggers a chain reaction.
First, the regulator steps in. It’s Ofgem’s job to keep the lights on (literally) for Tomato Energy’s 10,000 impacted customers. When a supplier goes under like this, Ofgem typically appoints what’s called a “Supplier of Last Resort” to take over customer accounts.
This sounds clean on paper, but in reality it can be a real mess.
Data doesn’t transfer properly. Usage records go missing. Credit balances get frozen or delayed. Billing systems take months to catch up. And customers, through no fault of their own, are forced to ride out the chaos.
If you don’t believe us, just give these Reddit threads a read:
Energy supplier switched without my knowledge - now have a huge bill
Energy supplier transferred my supply to another company against my explicit instruction
If no supplier is willing to (or able to) take over, the government appoints a special administrator, which is code for “taxpayer bailout”.
We saw this happen with Bulb in 2021. In this scenario, you (yes, you) are picking up the tab for Tomato Energy’s failure because the special administrator will use government funds to keep the company running so businesses can still operate.
This cost is then passed onto the system at large. That means higher standing charges, or an increase in the energy price cap to recoup these losses. When Bulb went bust, it cost the taxpayer an estimated £3.02 billion pounds.
Why the energy sector needs its “Stripe” moment
We’re glass-half-full people over here at tem. Sure, you might read this article and see a story about collapse. But we see a story about opportunity.
Similar to Stripe and PayPal — companies that reimagined how money moves — technological transformation is finally reaching the energy sector, and tem is leading this new frontier.
We were directly inspired by stories like this to build our own pricing engine and, on top of that system, create RED™ — a new-wave energy utility service — based on the explicit premise of operating outside of that wholesale market. This enables us to provide customers with a fair energy price whilst minimising the risks we take on as an energy company.
This is what a modern (and more importantly, stable) energy system should look like.
To discover more about RED™ and learn what to look for in a future-fit energy provider, read this article.