03 Dec Why Cheap Energy Deals Can Cost You More
Why Cheap Energy Deals Can Cost You More: Lessons from Tomato Energy
By Energy Smart Consultancy Ltd
When Tomato Energy collapsed in 2025, thousands of customers were left dealing with confusion, transfers, and in many cases, higher tariffs than the “cheap deal” they originally signed up for.
It’s a clear example of a recurring issue in the energy market, suppliers offering unrealistically low prices to attract customers, only to find themselves unable to sustain those prices over time.
Why some suppliers appear cheap, and why that can be dangerous
Suppliers who come in dramatically below the rest of the market rarely do so because they are more efficient. More often, their low pricing is driven by practices that create significant long-term risk for customers.
1. Avoiding mandatory charges
Some suppliers delay or fail to pay key regulatory costs such as the Renewables Obligation (RO), allowing them to appear cheaper temporarily, but creating hidden liabilities that eventually lead to collapse.
2. Operating with very thin margins
A supplier with extremely small margins has almost no resilience. When wholesale prices rise, even slightly, their financial position can deteriorate quickly.
3. Chasing rapid growth without adequate infrastructure
Ultra-cheap tariffs attract customers quickly, but many low-priced suppliers lack the systems, staffing or capital to support that growth, which leads to compliance issues and operational failures.
4. Using business models driven by short-term gain, not long-term sustainability
When a price looks far below the general market level, it often means the supplier is pushing costs into the future, which ultimately ends with customers being transferred to a new supplier on higher tariffs.
The impact on customers
When a low-cost supplier collapses, customers are automatically moved to another provider, usually on higher rates. Businesses experience even more disruption, including administrative delays and the loss of previously agreed contract terms.
Simply put, a low tariff offers no value if the supplier cannot survive the duration of the agreement.
How Energy Smart Consultancy Ltd protects clients
We only work with trusted, compliant and financially stable suppliers.
When comparing prices, we assess far more than the headline rate. We look at regulatory compliance including RO payments, financial strength, long-term pricing sustainability, and operational performance.
If a price looks suspiciously low, we treat it as a warning sign. As we often remind clients, if it looks too good to be true, it usually is.
Our role is to ensure clients secure competitive pricing, while avoiding the hidden risks that can lead to costly disruptions later.
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