Manchester-based Eversmart Energy has become the latest supplier to go bust.
The supplier is also the 14th energy firm to exit the market since November 2016.
Last year, Eversmart Energy was put on notice by the regulator for failing to pay into a fund when it did not source enough renewable electricity under the Renewables Obligation (RO) scheme.
Ofgem will now choose a new supplier to take on its customers and in the meantime, it is advising them not to switch until a new one has been appointed and they have been contacted in the coming weeks.
This will ensure the process of transferring customers and paying back any outstanding credit balances will be as smooth as possible.
Philippa Pickford, Ofgem’s Director for future retail markets, said: “Eversmart Energy customers do not need to worry, as under our safety net we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected.
“Ofgem will now choose a new supplier for you and 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.”
The Energy Ombudsman said it had seen a “significant increase” in complaints about Eversmart Energy, receiving four times as many complaints so far – 225 – this year compared to last year, at 55.
Chief Executive Matthew Vickers added: “Billing and switching problems have been the main drivers of unresolved complaints about the company.
“If you have complained to us about Eversmart and are awaiting a case investigation, decision or remedy we will contact you with an update soon. It’s unlikely that we will be able to take any further action on your complaint. In addition, as of today we cannot investigate any new complaints about Eversmart. We appreciate that this will be disappointing and frustrating for affected customers.
“As a not-for-profit ombudsman, we are funded by the case fees that energy companies pay to have complaints reviewed. In common with many other failed suppliers, Eversmart has ceased trading owing us a significant amount of money in unpaid case fees, increasing our exposure to bad debt.”
The news follows the launch of tougher rules for new entrant energy suppliers introduced by the regulator earlier this year.