The government and energy regulator have reportedly accelerated contingency plans to prepare for Bulb’s possible collapse, Sky News reported on Friday. If the company does go under it would become the biggest operator to fall victim to soaring energy costs.
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. Those customers would likely face higher bills if Bulb went under, as they would be transferred to rival providers and lose their current tariffs.
Bulb’s future hangs in the balance as talks about emergency funding look increasingly desperate. The Financial Times first broke news that Bulb was racing to secure new cash in mid-September. Talks are still ongoing but have yielding nothing so far after several weeks.
A spokesperson for Bulb said: “Our discussions with multiple parties to secure additional funding continue to make good progress and we’re encouraged by the drop in wholesale energy prices.
“We expect the government to monitor wholesale prices and their effect on the whole industry, but ministers and Ofgem have been clear we must emerge from the energy crisis with a competitive and innovative market, rather than a return to the oligopoly of the past.”
A spokesperson for Ofgem said: “There has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers. We know this is a worrying time for many people and our number one priority is protecting customers.
“In the event a supplier fails, Ofgem and government have robust processes in place to ensure customers’ electricity and gas supply continue and domestic customers’ credit balances are protected.”
The race for funding followed a surge in the price of natural gas over summer. Day ahead natural gas contracts were trading at 177p a therm this morning, up from just 50p a therm in April.
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. 16 companies have already gone bust so far this year, collectively affecting 2 million customers. 14 have collapsed since August alone.
A government spokesperson said: “Ofgem – as the expert regulator – is monitoring the situation across the energy market for the continued impacts on high worldwide wholesale gas prices.
“We have put in place the powers and robust processes to ensure customers do not experience any disruption to their energy supply and that costs are minimised if a supplier should exit the market.”