Eversmart Energy has become the sixth energy supplier to go bust so far this year, leaving thousands of households not knowing who will provide their gas and electricity.
The company supplied energy to 29,000 homes across the country but had been struggling in recent months – almost losing its licence earlier this year over non-payments of renewable taxes.
Regulator Ofgem will now pick a new supplier – known as the Supplier of Last Resort – to take on the customers, who are being advised not to switch until the SoLR is appointed.
Any outstanding credit balances will also be honoured by the SoLR.
Eversmart was criticised previously for launching a low-cost tariff in which households had to pay for a year’s worth of energy up front – but claiming to pay 12% interest on credit balances.
Bosses said at the time the tariff was “better value than an Isa or a high street savings account”, but Citizens Advice warned that the tariffs could lead to problems if a supplier goes bust and the huge outstanding debts are picked up by the rest of the industry.
It is not known if the SoLR will honour the 12% interest promised by Eversmart, or how many of the 29,000 customers were on the tariff, which involved handing over around £1,000 up front.
Gillian Guy, chief executive of Citizens Advice, said: “Eversmart is the 13th domestic energy company to collapse in the last two years.
“Our research shows this unlucky baker’s dozen of failed companies has left behind at least £172 million in unpaid costs. These will be picked up by other consumers through higher bills.
“When a supplier goes bust, customer credit balances are protected. But all of us will eventually pay for honouring them through increased bills.
“Ofgem needs to act to reduce the cost of supplier failures and protect customers.”
Emma Bush, energy expert at price comparison service uSwitch, added: “With yet another supplier going out of business, Ofgem needs to press ahead with its reforms for regular health checks on existing energy companies to ensure each and every one can finance its operations while upholding a high level of customer service.
“Regular stress-tests for suppliers and ongoing fit-and-proper person assessments would help that.”