What Happens If Your Business Electricity Supplier Goes Bust?

It is a quiet Tuesday morning, and an email lands in your inbox. It is not the usual renewal reminder. Your electricity supplier has ceased trading.

Take a breath. Your lights will stay on, your tills will keep working, and your fridges will keep humming. Ofgem, the energy regulator, runs a safety net for exactly this situation. What changes is everything around the supply: who bills you, what you pay per unit and what happens to any money you have already paid in.

This article walks you through what happens, using real UK examples, and gives you a checklist for the first 14 days. It also shows how to lower your risk before it ever happens to you. Whichever of the many business electricity suppliers you use, it is far better to learn the drill now than on the day.

The short answer: what changes and what does not

Your supply continues without a break, but your contract, your price and your credit balance all need attention. Here is the snapshot.

Table 1: What happens when business electricity suppliers fail. Source: Ofgem.

How the safety net works

The Supplier of Last Resort process

When a supplier fails and cannot be sold quickly, Ofgem steps in and directs another licensed company to take over its customers. This is the Supplier of Last Resort process, usually shortened to SoLR. Ofgem runs a competitive process, and suppliers bid to take the accounts. Ofgem says it should take a few days and no more than 14.

The chosen supplier must show it can handle the extra accounts without harming its existing customers. Recent history shows how this works. When Tomato Energy stopped trading in November 2025, Ofgem appointed British Gas to take on roughly 15,000 households and 8,000 business customers. Supply continued as normal.

When a supplier is too big to move: special administration

Sometimes a supplier is too large for a quick handover. In that case, Ofgem and the government can ask a court to appoint an administrator, who keeps the supplier trading while a rescue or sale is arranged. Bulb entered this Special Administration Regime on 24 November 2021. Its 1.5 million customers kept their supply throughout, and Octopus Energy completed its takeover in December 2022.

Table 2: Recent supplier failures and who took over. Sources: Ofgem, Ofgem on Tomato Energy and gov.uk.

The first 14 days at a glance

Supply never stops at any point. Step four is where costs can creep up, so it pays to move quickly.

What changes for your business

Your fixed price ends and a deemed contract begins

Your old tariff ends when the new supplier takes over. You then move onto a deemed contract, which is one you did not choose. Ofgem warns these can cost more, because the supplier takes on extra risk, such as buying wholesale energy at short notice.

Here is an illustration. Picture a café using 20,000 kWh a year. On a fixed deal at 27p per kWh, three months of electricity costs about £1,350. On a deemed rate of 38p, the same three months cost about £1,900. That is £550 extra for doing nothing, or £2,200 over a full year. Deemed rates vary, so treat these as example figures, not quotes.

The good news is that you are not locked in. Once the new supplier has contacted you, you can pick another tariff or supplier with no exit fees. The sooner you compare, the sooner the extra cost stops.

Your credit balance is the weak spot

This part is worth reading twice. When a household supplier fails, Ofgem protects customers' credit balances. For businesses, it does not. Ofgem says it will try to appoint a supplier that covers some or all of the credit owed, but this is not guaranteed. Otherwise, you would apply to the failed supplier's administrator, much as you would if any other service provider became insolvent. Broker guides suggest these claims can take more than a year, and you may not recover everything.

Table 3: How the safety net treats homes and businesses. Sources: Ofgem and SwitchUrEnergy.

If you owe money

Debts do not disappear. If the new supplier takes on your old supplier's customer debts, you repay them. If not, you may still owe the old supplier or its administrator. Wait for the new supplier to explain before you pay anyone.

Smart meters and switches under way

• Smart meters: If the new supplier cannot run your smart meter in smart mode, send manual readings until it can.

• Switches already underway: These carry on, and you still move to the supplier you chose.

What to do in the first 14 days

Follow these steps in order. None of them needs a specialist.

1. Check the news is real. Confirm it on Ofgem's website before acting on any email or call, in case it is a scam.

2. Take a meter reading. Photograph the display too, so your final bill is accurate.

3. Sit tight and do not switch yet. Ofgem advises waiting for the new supplier to contact you. A switch already agreed carries on.

4. Save your paperwork. Download bills, statements, your contract and any deposit receipts, in case the old supplier's website goes offline.

5. Decide about your direct debit. You can cancel it while you wait, but you still owe for the energy you use, so set the money aside.

6. Talk to the new supplier. Ask for its cheapest business tariff and what happens to any credit or debt.

7. Compare the market. Once you are set up, compare business electricity suppliers before agreeing to a contract. You will not pay exit fees.

8. Claim any credit. If it is not honoured, contact the administrator with your bills, statements and readings.

Need free, independent help? Citizens Advice runs a business energy helpline on 0808 223 1133 for England and Wales.

Why do business electricity suppliers fail?

Most failures come down to cash. A supplier sells you a fixed price, then has to buy the power at whatever the wholesale market charges. If prices jump and the supplier has not hedged well or lacks capital, the gap can sink it. Ofgem says the market is now more resilient, but some companies will still fail from time to time.

Regulation has tightened, but the capital rules were built for household suppliers. Ofgem's minimum capital requirement applies to companies supplying homes, with a target of £115 in net assets per dual fuel customer. A supplier serving only businesses sits outside that rule, so you cannot assume the same cushion is in place.

Tomato Energy shows how the warning signs can look. In April 2025, Ofgem issued a provisional order and opened an investigation into its capital and liquidity. A £1.5 million penalty was proposed in October, and the company ceased trading on 5 November 2025. British Gas owner Centrica called it the 31st supplier to fail since 2021.

Size is no guarantee either. Bulb had 1.5 million customers when it collapsed. Established names such as British Gas and Octopus Energy have stepped in when others failed, but scale is a reason for confidence, not a promise.

How to protect your business before it happens

You cannot stop a supplier from failing, but you can limit the damage. These habits take minutes, not days.

Keep your credit small

Ask your supplier to set your direct debit close to your real usage, and send regular meter readings. If you pay £600 a month but use £400, you are lending your supplier £200 a month. After six months, that is £1,200 you might struggle to recover.

Run a quick health check before you sign

Price matters, but so does staying power. These four checks are free.

Table 4: A four-point supplier health check.

Build four small habits

• Ask about deposits. If a supplier wants a deposit or advance payment, ask how much it is, when it comes back and how it is protected.

• Diarise your renewal date. Set a reminder three to six months ahead. Missing it sends you onto deemed rates, whether or not your supplier fails.

• Keep a records folder. Store your contract, bills, MPAN and meter photos in one place.

• Compare, do not just renew. The UK energy services market has roughly 35 to 40 licensed suppliers. Our guides on Big Six vs independent suppliers and British Gas Business vs Octopus Energy for Business explain the trade-offs.

How SwitchUrEnergy can help

We compare business electricity suppliers in one place, including British Gas, EDF, E.ON Next, ScottishPower, SmartestEnergy, TotalEnergies, Crown Gas & Power, Utilita and Yü Energy. You see price, contract length and terms side by side, instead of taking the first renewal letter that lands.

Our service is free to use, and we earn from supplier partners when a customer switches through us. If a failure has affected you, we can talk you through your options once your new supplier has been in touch. Typical business switches complete within two to six weeks, and your supply carries on throughout.

Ready to look? Get a free business energy quote or call (0203) 9500885, Monday to Friday, 9 am to 5 pm.

Frequently Asked Questions

Will there be a cut-off if business electricity suppliers go bust?

No. Ofgem's safety net keeps your supply running while a new supplier is appointed, which takes a few days and no more than 14.

Do I lose the credit on my account?

You might. The safety net does not cover business credit balances, although Ofgem tries to find a supplier that will honour some or all of it; if it does not, claim through the administrator with your bills and meter readings to hand.

Should I switch business electricity suppliers straight away?

No. Ofgem advises waiting until the new supplier contacts you. After that you can shop around, and you will not pay exit fees.

Do microbusinesses get different treatment?

Ofgem counts you as a microbusiness if you use up to 100,000 kWh of electricity a year, or have fewer than ten employees and turnover or a balance sheet of up to €2 million. You get extra protections, such as access to the Energy Ombudsman, but the credit balance gap applies to you too.

Is a bigger supplier like British Gas or Octopus electricity safer?

Scale helps, because large groups have deeper pockets, and both names have taken on customers from failed suppliers. But Bulb was big too. Judge price, service and financial strength together, and compare British Gas and Octopus electricity quotes against the wider market.

Final Words

If your business electricity suppliers go bust, the lights stay on. What needs your attention is the price you move onto and any money you have paid in. Take a reading, sit tight, keep your paperwork and compare the market as soon as your new supplier makes contact.

Better still, do the groundwork now. Keep your credit low, diarise your renewal date and choose your next contract with financial strength in mind, not just the headline rate. When you are ready, compare business electricity suppliers with SwitchUrEnergy or call (0203) 9500885.