Tomato Energy (Electric Only Supplier) - Too Good To Be True ?

MWT

Boohoo said:

GingerTim said:

'until I say it is over, it is not'...

If Tomato are closing down because of the big fine does that mean the 1.5mill fine is added to their debt and the energy consumers will have to pick up the debts in higher standing charges like before?

No, this was a proposal by Ofgem to fine them, not yet an actual fine, if they enter administration before the fine is imposed then I believe they will avoid it, as they will lose their supply licence and not therefore be subject to Ofgem any more.

The proposal to implement the fine just added even more weight to the already nearly impossible mental gymnastics the directors were having to perform to maintain the belief that the company was solvent and hence able to continue to trade. 

bob2302

What's the timescale on this? Is it worth trying to beat SOLR? 

masonic

bob2302 said:

What's the timescale on this? Is it worth trying to beat SOLR? 

It should be possible to beat SOLR if you are so inclined. 

MeteredOut

Can someone edit this thread subject to remove the question mark please.

Newbie_John

MeteredOut said:

Can someone edit this thread subject to remove the question mark please.

Their main issue doesnt come from too low prices, but from accepting meters they couldn't serve (and belief they'll sort that out). That had an impact on cashflow, that had impact on people and companies complaining at them, that had impact on fines and more cash troubles..

Looking around there's a lot of similar tarriffs BUT they all first take you on their standard rate and then to a TOU tarrif.

Still a glimmer of hope 😎

masonic

Newbie_John said:

MeteredOut said:

Can someone edit this thread subject to remove the question mark please.

Their main issue doesnt come from too low prices, but from accepting meters they couldn't serve (and belief they'll sort that out). That had an impact on cashflow, that had impact on people and companies complaining at them, that had impact on fines and more cash troubles..

Looking around there's a lot of similar tarriffs BUT they all first take you on their standard rate and then to a TOU tarrif.

Still a glimmer of hope 😎

The critical error seems to be not having the financial backing to fund the losses necessary from the outset. The combination of standing charge and unit rates made the offering loss-making from the get-go, but not as loss making as when you fail to settle 40% of your TOU metered energy consumed and 45% of your single rate energy consumed. Especially when you then offer write-offs to customers without the money to back the promise. Had the metering issues not been there, then perhaps new customer acquisition would have continued, but the additional customers could easily have generated an equivalent cash burn rate. It's just a large loss per customer over a small number of customers vs a small loss per customer over a large number of customers. We've got an estimate of the cost of the provisional order from Farouk at ~£50m lost revenue, which to put in context is only 10% of their 2023 revenue.

The viability of the business seemed to be contingent on attracting additional investment along the way, which was far from assured, and rather less likely with each blunder along the way.

I have to mention again how many years it took Octopus, offering similar loss-leaders to customers, before it was finally able to achieve a small profit from a large slice of the market. The difference being, they had the capital backing them to play the long game, and the industry expertise to navigate the situation rather more skilfully.

Back in January, I thought Tomato were trying to emulate that. Even more so when it appeared they could afford to voluntarily give energy away for free to those customers they weren't billing. It was only following the publication of their overdue 2023 accounts, and the investigation by Ofgem that it became clear they were actively seeking money to maintain their cash burn.

If they'd just had the knowledge and experience to operate with a bit more care and skill they might have got away with it and struck lucky with investment by now.

lohr500

masonic said:

Newbie_John said:

MeteredOut said:

Can someone edit this thread subject to remove the question mark please.

Their main issue doesnt come from too low prices, but from accepting meters they couldn't serve (and belief they'll sort that out). That had an impact on cashflow, that had impact on people and companies complaining at them, that had impact on fines and more cash troubles..

Looking around there's a lot of similar tarriffs BUT they all first take you on their standard rate and then to a TOU tarrif.

Still a glimmer of hope 😎

The critical error seems to be not having the financial backing to fund the losses necessary from the outset. The combination of standing charge and unit rates made the offering loss-making from the get-go, but not as loss making as when you fail to settle 40% of your TOU metered energy consumed and 45% of your single rate energy consumed. Especially when you then offer write-offs to customers without the money to back the promise. Had the metering issues not been there, then perhaps new customer acquisition would have continued, but the additional customers could easily have generated an equivalent cash burn rate. It's just a large loss per customer over a small number of customers vs a small loss per customer over a large number of customers. We've got an estimate of the cost of the provisional order from Farouk at ~£50m lost revenue, which to put in context is only 10% of their 2023 revenue.

The viability of the business seemed to be contingent on attracting additional investment along the way, which was far from assured, and rather less likely with each blunder along the way.

I have to mention again how many years it took Octopus, offering similar loss-leaders to customers, before it was finally able to achieve a small profit from a large slice of the market. The difference being, they had the capital backing them to play the long game, and the industry expertise to navigate the situation rather more skilfully.

Back in January, I thought Tomato were trying to emulate that. Even more so when it appeared they could afford to voluntarily give energy away for free to those customers they weren't billing. It was only following the publication of their overdue 2023 accounts, and the investigation by Ofgem that it became clear they were actively seeking money to maintain their cash burn.

If they'd just had the knowledge and experience to operate with a bit more care and skill they might have got away with it and struck lucky with investment by now.

Couldn't agree more. Failed through their own naivety and incompetence. In my opinion it was touch and go based on the pricing, but once they screwed up the onboarding and billing, the writing was on the wall.

EssexHebridean

I think the very fact that this thread exists - due to the pricing - says a lot. Was that level of loss-leading ever really sustainable? No - or at least not for a company that was actually doing anything other than playing with other people’s money. Unfortunately as already said, it now looked like the people who will be picking up the tab will be other consumers - including those who rightly called out Tomato’s practices as being unethical from the start - or rather once the failure to pay bills etc became known. 

Sometimes there is a bandwagon which, although it ultimately fails, you wish you’d have jumped on because it would have saved you money - for me at least this is not one of those times though. Like most people here I’ve played the comparison game for cheaper prices in the past, but I’ve never gone with or stayed with a company whose business practices felt actively shoddy. I did debate about a switch to Tomato a while ago but held off until they’d settled a bit - but that “settling” has never really happened, has it!

GSV3MIAC2

The real losers are the staff, most of whom were innocent, and customers / suppliers owed money (export customers who were never paid). 

Boohoo

GSV3MIAC2 said:

The real losers are the staff, most of whom were innocent, and customers / suppliers owed money (export customers who were never paid). 

Interesting 1st post.

Are you one of those people you have mentioned?