Yahoo Finance Bulb Energy enters ‘special administration’ after collapse
Bulb Energy has gone bust and will be placed into an untested “special administration” process to manage the fallout of the biggest energy supply collapse on record.
The energy regulator drew up plans over the weekend to put the company into a process designed to protect Bulb’s 1.7 million household customers and ensure continuity of supply, according to industry sources.
Bulb told its staff that it would continue to operate “with no interruption of service or supply to members” and urged customers not to worry “as your energy supply is secure and all credit balances are protected”.
The company’s collapse has been long expected by industry rivals after it struggled to find new investment, or a willing buyer, before the UK’s looming winter energy crisis.
“It has been like watching a zombie movie – you know they’re walking dead but you couldn’t be sure when they’d stop moving,” one senior industry source said. “They’ve long been dicing with death but the recent events in the energy market have been a catalyst for what would have happened anyway.”
Bulb blamed the surge in energy market prices ignited by the global gas crisis for scuppering its plans to raise funds to fuel its ongoing growth, which included new businesses in France, Spain and the US state of Texas.
“When we started exploring fundraising options, we were delighted to receive lots of interest from investors to fund our business plans and future growth,” the company said in a blog post on Monday. “However, 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.”
The company also took aim at the UK’s rising energy price cap, which was designed to set a fair energy price for around 15m homes using standard energy tariffs but which has not kept pace with the rocketing increases in the wholesale energy markets.
The record increase in energy bills has caused 21 suppliers to collapse since the start of September, leaving the regulator, Ofgem, to find new suppliers to take on more than 2 million customers. The collapse of Bulb brings the number of households affected by a failed energy supplier to more than 3.7m.
The size of Bulb’s customer base means Ofgem is unable to find a supplier that would be willing or able to take on all of Bulb’s customers via its usual safety net process. Instead, the regulator will need to use untested legislation, in place since 2011, to put the company into special administration while a complex plan for its future is mapped out.
The process to appoint the special administrator is not yet complete, Bulb said, but it expected it to be agreed soon. The process is similar to other bailout schemes used to keep critical infrastructure companies including British Steel and railways running with the help of government funds.
The energy regulator is expected to work alongside the Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury to keep the company running through the winter and until a fate for its customers is decided.
Some energy industry sources believe the company may be left in “special administration limbo” for up to a year, at a significant cost to the government, because it would be easier to find new private-sector investment or a willing buyer when energy prices have started to return to normal.
Gillian Cooper, the head of energy policy for Citizens Advice, said Bulb customers would be protected by the special administration process and “shouldn’t see much change to their service for now”.
She added: “But when the country’s sixth largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated. It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”
The regulator has conceded in recent weeks that “robust action” was required to overhaul the energy market due to the ongoing supply market crisis.
Ofgem was not available for comment.
