Two energy companies which supply more than 400,000 homes have gone out of business, Ofgem announced on Wednesday.
The energy regulator said that it would protect the customers of Green Network Energy and Simplicity Energy after the two businesses failed.
Green Network Energy supplies around 360,000 domestic customers with gas and electricity, while Simplicity Energy has around 50,000 customers.
They are the latest failures in a sector that has been squeezed in recent years.
— ofgem (@ofgem) January 27, 2021
Customers will automatically be moved to a new supplier, chosen by Ofgem, and should not take any action at this time apart from taking a meter reading, the regulator said.
Ofgem director of retail Philippa Pickford said: "Green Network Energy and Simplicity 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 are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. 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."
Sarah Broomfield, energy expert at Uswitch.com, said: "Challenger brands have faced a difficult year. They've been hit hard by the knock-on effects from the pandemic and many operate on thin profit margins.
She added: "To ensure bills are accurate, customers should make a note of their meter readings now, and do so again when contacted by a new supplier.
"Once you know your supplier, and the tariff you have been offered, it is worth comparing prices to check if switching to another provider will offer better value for money. You will not be charged exit fees for moving to another supplier."