Bulb said: “We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members. If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”
Bulb is the first company to use the government’s special administration process, which will see the business effectively nationalised until a more permanent solution can be found. An official administrator will be appointed, which will then seek either a rescue deal, restructuring or sale of the business. The administration will be funded by taxpayers.
An Ofgem spokesperson said: “Customers of Bulb do not need to worry - Bulb will continue to operate as normal. Ofgem is working very closely with Government. This includes plans for Ofgem to apply to Court to appoint an administrator who will run the company. Customers will see no disruption to their supply and their account and tariff will continue as normal. Bulb staff will still be available to answer calls and queries.”
Challenger energy provider Bulb was founded in 2015 but has grown rapidly to become Britain’s seventh largest heating provider, with 1.7 million customers. Bulb began hunting for emergency investment in mid-September.
The race for funding followed a surge in the price of natural gas over summer. The price of gas has risen from around 50p per therm at the start of the year to 400p.
The rising cost of gas combined with the UK’s price cap on domestic tariffs means operators are now facing huge losses as they supply energy to companies at lower prices than it costs to generate. 25 suppliers have gone bust so far this year, meaning more than half the market has collapsed.
Gas prices began to ease in recent weeks but delays to the approval of the Nord Stream 2 gas pipeline in Germany last week sent prices spiking again last week and Bulb said this hastened its collapse.
Bulb’s collapse almost doubles the number of customers affected by the changes to around 4 million.
Bulb said in a blog post: “The rising energy crisis in the UK and around the world has concerned investors who can’t go ahead while wholesale prices are so high and the price cap—designed to protect customers—currently means suppliers provide energy at a significant loss.”
Most energy businesses that have collapsed have had their customers transferred to a rival supplier under a government process known as “supplier of last resort”. However, the scale of Bulb means it is too big for this process - the sheer number of its customers could overwhelm other suppliers.
Instead, Bulb has been placed in special administration, which means a company will be appointed to oversee the operations of the business and ensure uninterrupted energy supply for customers.
A spokesperson for Prime Minister Boris Johnson said: “We’ve put in place the powers and robust processes to ensure customers don’t experience disruption to their energy supply and costs are minimized if a supplier does exit the market.”
Bulb said in a blog post: “We’re expecting a high volume of calls today, so please only call if it’s an emergency, you’re in a vulnerable situation or you are struggling to pay your bills.
“Thank you to our members and to our team who continue to work so hard to build amazing products, provide brilliant customer service, and bring renewable energy to our members around the world.”