NEWS

It’s been a few years since a UK energy supplier ceased trading due to financial issues. But unfortunately, it’s happened again. Rebel Energy – a small supplier with 90,000 customers based in Bedford – has gone out of business. The news was announced on April 1st by its founder, Dan Bates.

In this article, we’ll look at the timeline that led to Rebel Energy’s demise. Then, we’ll lay out what happens next for Rebel Energy customers and the wider energy landscape. Let’s get started.

Rebel Energy ceases trading

The April 1st announcement by Rebel Energy founder Dan Bates was the culmination of a long struggle for the small energy supplier. 

Throughout January, Ofgem and Rebel Energy began working together to address financial issues. As part of their license to trade, Ofgem requires suppliers to ringfence a certain amount of money in the bank, called the Renewables Obligation Certificate. However, Rebel Energy reported that it had dipped into those funds to keep its business going. The shortfall was nearly £5 million. 

On March 14th, Ofgem issued an order to ban Rebel Energy from taking on new customers or upgrading existing customers’ tariffs. They were also told to stop any marketing or customer acquisition activity.

Finally, on April 1st, Rebel Energy went out of business. Ofgem stepped in to guarantee Rebel Energy customers’ energy supply and arrange a new supplier to take on their accounts. Customers were advised to take a meter reading and wait for further information.

Supplier of last resort

On April 7th, Ofgem announced that British Gas would be taking over energy supply obligations for Rebel Energy’s 90,000 customers. If Rebel Energy customers had any credit in their accounts, that money would be protected. Customers would also be protected from changes to the energy price cap. Rebel Energy customers should now wait for British Gas to get in contact. This is called a Supplier of Last Resort procedure.

It is an example of Ofgem’s measures to protect customers when energy suppliers go out of business working smoothly. No Rebel Energy customer faced any disruption to their supply, none lost any credit and British Gas would be proactive in changing their accounts over, rather than the customers having to chase around. Everything happened automatically.

The system works

Since the energy crisis in the early 2020s, Ofgem tightened rules to make energy suppliers more financially robust. This includes ensuring companies have sufficient capital ringfenced to handle any market shocks. Suppliers also have to ringfence customer credit balances, so if the company does go out of business, customers don’t lose their money. These measures are part of a broader mission to improve the sector’s resilience and protect customers.

While it’s sad to see a smaller supplier like Rebel Energy go out of business, it’s an example of the system working. Ofgem engaged with Rebel Energy about the ringfenced money. In fact, Rebel Energy reported the withdrawal from the pot themselves. However, when the shortfall got out of hand, Ofgem took measures. Then, when Rebel Energy could not carry on, Ofgem arranged for a new supplier to handle their customers’ accounts with as little disruption as possible.

What’s next?

We hope that Rebel Energy’s demise is an isolated incident and that there will be no more small suppliers going out of business. However, in an uncertain economy with a volatile energy marketplace, others could easily fall. 

In his statement to customers, Rebel Energy founder Dan Bates cited a perfect storm of rising wholesale costs during January and February and an ongoing cost-of-living crisis. Was Rebel Energy really the only supplier facing financial challenges?

We hope for better news in the future.