Ovo Energy has been appointed as the supplier of last resort to take on the 235,000 customers of failed supplier Economy Energy.

Ofgem selected Ovo after a competitive tender process run by the regulator to get the “best deal possible” for customers.

Ovo will honour all outstanding credit balances, including money owed to both existing and former customers of Economy Energy.

The company said it will absorb all the costs associated with the credit balances and the migration of customers instead of this being shared by the industry.

Warm Home Discount customers who have already been approved by Economy Energy will continue to receive their payment from Ovo Energy.

Energy supply will continue as normal and existing customers will switch over to Ovo Energy tomorrow (Saturday 12 January).

Customers with prepayment tariffs can continue to top up their meters and will be contacted by Ovo Energy’s prepayment brand Boost.

Philippa Pickford, Ofgem’s director for future retail markets, said: “I am pleased to announce we have appointed Ovo Energy, which will offer Economy Energy’s customers a competitive tariff for their energy. Their credit balances will be honoured and their energy supply will continue as normal.

“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.

“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.”

Ovo said the energy market is seeing “major change and rapid consolidation” as many suppliers struggle to “adapt in tough market conditions”.

Economy Energy became the ninth energy company to enter Ofgem’s supplier of last resort process in the last 12 months.

In November 2018, Ofgem appointed OVO Energy to take over Spark Energy’s 290,000 customer accounts. Together with Economy Energy’s 235,000 customers and Corgi HomePlan this now takes Ovo’s retail customer base to 1.5 million.

An Ovo 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.”