Yahoo Finance Bulb Energy administration: What to do if you’re a customer
Bulb Energy has become the largest domestic energy supplier to collapse amid soaring natural gas prices.
Bulb said on Monday it had agreed to place the business into special administration. The company was founded in 2015 but had grown rapidly to reach 1.7 million customers, making it Britain’s seventh biggest energy supplier.
Robert Buckley at energy consultancy Cornwall Insight, said: “The failure of Bulb today marks dark times for the energy sector, with this being the biggest failure of a supplier since TXU Energy nearly 20 years ago.
“Bulb’s customers will not only be worried about the continuity of their energy supply but the costs of the energy they will have to pay.”
What should Bulb customers do?
Bulb customers do not need to do anything at this stage.
Bulb says: “Special administration is designed to allow Bulb to continue to operate as usual so you don’t need to take any action. Your tariffs are not changing, and the price cap applies to all consumer energy tariffs. If you pay for your energy by top up, your top ups will continue to work as normal. If you’re in the process of switching to or from Bulb, your switch will continue.”
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.”
Justina Miltienyte, energy policy expert at Uswitch.com, said: “Affected consumers should not cancel their direct debit - you will continue to receive energy and be billed for it, as normal. It’s also worth noting that Bulb customers will be protected by the current price cap, until April 2022.
“Technically, you can switch suppliers, but it is worth bearing in mind that there are unlikely to be better deals available elsewhere. You’re probably better off staying put and waiting for the dust to settle on the current situation.”
Lisa Barber at Which? agrees: “Due to current high wholesale prices, there are few savings to be made by switching and some suppliers are not taking on new customers. “
Bulb customer may want to take regular meter reading and record them in case of any changes in future.
What is a special administration?
Special administration is a process that ensures electricity keeps flowing when large energy companies collapse.
Ofgem and the government will appoint an official administrator to run the business until a more permanent solution can be found. The cost of running the business in administration will be paid for by the government.
Bulb is the first business to use the special administration process, which was created in 2017. All the other energy companies that have collapsed so far this year have seen their customers transferred to other suppliers under the ‘supplier of last resort’ system. Bulb simply had too many customers for any one supplier to easily absorb.
What happens next?
When appointed, the administrator will look to find a permanent solution. This is likely to mean either restructuring the business, selling it, or shutting it down if neither of those options are viable.
Miltienyte said: “The administrator may decide to close the supplier down in the future, and move customers elsewhere. But customers will be kept informed by Ofgem and the administrators about what will happen next.”
Will bills go up?
Customers are protected from any price rises until April 2022 under Ofgem’s price cap system, so long as they remain on their current deals with Bulb.
Buckley said: “The administrator will have a duty to maintain domestic customers at a price no higher than the default tariff price cap. It also has a responsibility to keep the cost to a minimum and minimise the costs of Bulb’s exit for both customers and the industry.”
Longer term, the rise in wholesale gas prices and the cost of dealing with widespread failures across the industry means bills are likely to go up next year across the sector when the price cap is reviewed next Spring.
Martin Young, an analyst at investment bank Investec, said: “Consumers look set to shoulder the price of failure, possibly to the tune of £75/dual-fuel customer or more. They will rightly want answers.”
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