Taxpayer to shoulder cost of running collapsed firm after fundraising plans scuppered by energy crisis
Last modified on Wed 24 Nov 2021 09.06 EST
Bulb Energy could be in the hands of an administrator within hours after the regulator applied to the courts for an advisory firm to run it after its collapse on Monday.
Britain’s seventh-largest supplier is expected to become the first energy company to be placed into a “special administration” process so it can continue to provide gas and electricity to its 1.7 million customers through the winter after going bust on Monday.
The provision for a special energy supplier administrator was first set in legislation in 2011 but has never been used, in part because previous supplier collapses have been small enough in scale to find a new buyer relatively quickly.
Energy industry sources believe it could take “somewhere between six weeks and six months” for the fallout of the Bulb collapse to be resolved by the administrator and a team of banks, which are due to be appointed in the coming weeks.
The energy regulator, Ofgem, has proposed that the global advisory firm Teneo take over the running of Bulb while the fate of gas and electricity customers is decided. A court hearing is expected to take place later on Wednesday before an appointment is confirmed.
Ofgem urged Bulb customers not to worry and said they would “see no disruption to their supply, their price plan will remain the same and any outstanding credit balances, including money owed to customers who have recently switched, will be honoured”.
The cost of running the company through the winter, to be shouldered by the Treasury, may run into hundreds of millions of pounds for UK taxpayers. The administration could also lead to higher energy bills if parts of these costs are shared across the energy market.
Bulb is by far the largest energy supplier to go bust after a string of more than 20 company collapses since September. The total cost of the energy market crunch could run to about £2bn this winter, according to Investec analyst Martin Young. But the final tally remained unknown as “Bulb’s failure takes us into uncharted waters”, he said.
Staff and customers were told by Bulb on Monday that the company had made the “difficult decision” to agree to a special administration process after its plans to raise more funds were scuppered by the energy crisis.
The company was in dire need of fresh funds as debt repayments loomed but investors were understood to be wary of backing energy companies amid record high gas and electricity market prices, and may have been unconvinced by Bulb’s recent performance.
A business department spokesperson said: “The Special Administration Regime is a longstanding, well-established mechanism to protect energy consumers and ensure continued energy supply when a supplier fails.”
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