Ofgem is in the process of choosing a supplier of last resort for the troubled company’s 235,000 domestic customers.
Economy Energy was not allowed to request one-off payments or increase direct debits until customer service failings had been addressed.
The company’s website includes a statement advising customers that it has ceased to trade and that Ofgem is appointing a new supplier for its customers.
It said: “Customers need not worry, their supplies are secure and credit balances are protected.
“Ofgem’s advice is not to switch, but to sit tight and wait until the new supplier has been appointed. This will help make sure that the process of handing customers over to a new supplier, and honouring credit balances, is as hassle free for customers as possible.”
Under Ofgem’s safety net, the energy supply of Economy Energy’s customers will continue and prepayment meters can be topped up as normal, the regulator confirmed.
The outstanding credit balances of domestic customers will also be protected.
A new supplier will be chosen and customers will be contacted by this supplier once the process is complete.
Acknowledging the demise of several energy companies in the past year, Ofgem said its safety net procedure is working as it should to protect customers.
Philippa Pickford, Ofgem’s director for future retail markets, said: “Our message to energy customers with Economy Energy is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.
“Ofgem will now choose a new supplier for you, ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.
“We have seen a number of supplier failures over the last year and our safety net procedures are working as they should to protect customers.”
Ofgem previously opened three enforcement investigations into Economy Energy, two of which will now close.
The investigation into whether Economy Energy, E and Dyball Associates have infringed chapter I of the Competition Act 1998 will remain open.
Last week, Ofgem issued a provisional order to Economy Energy, which prevented the supplier from taking on new customers.
Utility Week revealed yesterday (7 January) that Economy Energy was likely to enter the supplier of last resort process as indications the company was in financial difficulty sparked further concern the company was closer to going bust.
The news came after Elexon published a credit default notice for Economy Energy on the BM Reports website.
In November 2018, Ofgem placed Economy Energy under investigation for failing to meet the 31 October deadline for late payments under the Renewables Obligation scheme. Shortly afterwards the company was revealed to owe more than £17 million.
Gillian Guy, chief executive of Citizens Advice, said: “The failure of energy suppliers is becoming an all too familiar story. Ofgem’s moves to tighten up the licensing rules should address the problem of unprepared companies coming into the market.
“But the continued failure of suppliers shows there are firms operating that require the regulator’s urgent attention.”
The Coventry-based energy company joins a long list of small suppliers that have ceased trading recently, including Spark Energy, Usio Energy, Iresa Energy, Extra Energy, Future Energy, National Gas and Power, Gen4U, and One Select. Snopdrop Energy also transferred all its customers to fellow Sheffield-based energy supplier Nabuh Energy towards the end of last year.