Yorkshire Energy latest energy supplier to collapse

74,000 domestic customers are affected by the collapse, with the regulator telling them to hold off from switching away for the time being.

Yorkshire Energy, also known as Daisy Energy, have only been trading for two and a half years.

They are the latest in a long line of small supplier collapses in recent years.

Credit: Daisy Daisy/Shutterstock.com

Ceasing to trade

There have been rumours for several weeks that Yorkshire Energy were on the brink of collapse, but the announcement this week confirmed they were ceasing to trade.

It leaves 74,000 homes and a small number of non-domestic customers waiting for Ofgem to appoint a Supplier of Last Resort (SoLR) to take over their energy supply.

No customers will be disconnected during the transfer process to another supplier, but Ofgem advise customers they shouldn't switch to another energy provider until they have heard from whichever company they appoint as SoLR â€" this will avoid confusion.

They also suggest customers should take a meter reading to be prepared for when their new supplier contacts them.

Latest collapse

Yorkshire Energy is the latest casualty in a long-running saga of energy companies collapsing and forcing Ofgem to step in to protect their customers.

Back in October, we saw Tonik Energy fold after being named by the regulator as a company likely to miss the late payment deadline for their Renewables Obligation (RO) payments.

Symbio Energy and Nabuh Energy were also named as suppliers of concern and issued with final orders, although Symbio have since settled their debts and are continuing to trade as normal. There have been no further updates on Nabuh.

Robin Hood Energy's exit from the market in September was far more orderly as they arranged a transfer for their 112,000 customers to British Gas before announcing they were ceasing trading.

With the supplier backed by Nottingham City Council, their approach to their collapse was practical, and customers knew who their new supplier was going to be before their existing supplier went bust.

More to come?

Under ideal circumstances, Yorkshire Energy would have performed an orderly exit from the market in the same way Robin Hood Energy did - this is something Ofgem are working towards to stabilise the energy market.

If these new rules come into force, suppliers will undergo milestone checks when they reach 50,000 and 200,000 customers and provide supply continuity plans to demonstrate they have a strategy in place if they need to exit the energy market.

This brings existing suppliers into line with the licencing tests Ofgem implemented for new energy providers in 2019.

They give Ofgem the power to ensure new energy companies have enough money to sustain themselves while they build up their customer base, as well as checking they are well-prepared for the customer service side of business.

If these two sets of regulations had been in force earlier, the collapse of Yorkshire Energy may not have occurred, or their exit from the market might have been more orderly.

There are dozens of small energy suppliers operating in the UK, and many of them continue meeting their obligations and serving their customers. The only time we tend to hear much about them is when they run into trouble.

Yet when we compare energy plans, we find deals from the smallest providers are often the cheapest.

While larger suppliers argue these cheap tariffs are unsustainable, smaller energy companies counter this by saying big firms are squeezing customers.