235,000 new customers will be taken on by OVO Energy, following the collapse of Economy Energy last week.
Customers have been offered a “competitive tariff” by OVO Energy, which is a smaller competitor to the Big Six.
Ofgem selected OVO to supply Economy Energy’s former customers as part of the safety net procedure.
This procedure obliges other UK energy suppliers to cover certain debts of failed companies. Ofgem has said that OVO will honour all outstanding credit balances and repay both existing and former customers of Economy Energy.
“Ovo Energy has also agreed to absorb the costs of taking on these customers and outstanding credit balances, which means the extra costs will not fall on the industry or households,” said Philippa Pickford, Ofgem’s director for future retail markets.
This decision will expand OVO Energy’s retail customer base to around 1.5 million contracts. Since June 2017 they have acquired almost 900,000 customers and hold a 2.5% domestic market share.
The company recently acquired Spark Energy at the end of last year and took on its 290,000 customers. OVO also purchased the operating equipment for the failed firm in order to serve customers under its existing structure.
An OVO Energy spokesperson said: “This is a good outcome for Economy Energy customers who have had an uncertain few weeks. We are very pleased to welcome these customers to OVO.
“If you are an Economy Energy customer, please wait for us to contact you once your new account has been set up.”
Credit meter customers will automatically be moved over to ‘Simpler Energy’ which is the standard variable tariff at OVO, and prepay customers will be moved onto Boost, which is OVO Energy’s prepayment brand. Boost’s standard variable pay-as-you-go tariff will then be available to prepay customers.
Pickford added that “Ovo Energy will be in contact with customers over the coming days with further information. Once the transfer has been completed, customers can shop around for a better deal if they wish to.”
In the meantime, it is recommended that customers take a meter reading and do not try to switch providers until they have been moved over.
Economy Energy’s was the ninth company bankruptcy to hit the domestic utilities industry in a year. Rising wholesale costs have been blamed for the rising failures of smaller low-cost suppliers, who are unable to hedge resources in advance.
Only a week ago the firm were barred from taking on new customers by Ofgem, for a minimum of three months.
Ofgem said at the time that they were ‘taking action to protect customers from suffering more harm’ due to the ‘unacceptable level of customer service provided by Economy Energy’.
Small energy suppliers that have exited the market now include Extra Energy alongside Spark Energy, Future Energy, National Gas and Power, Iresa Energy, Gen4U, Usio Energy and One Select.