Lights out for Bulb, 1.7 million customers affected
The ongoing energy crisis has claimed its biggest victim as the UK’s seventh largest energy supplier, Bulb announced that it has entered administration.
The blame game
Bulb is by far the largest energy supplier to have failed as a result of soaring wholesale gas prices and became the 23rd to have collapsed since August.
Due to its size, Ofgem’s SoLR process is unable to absorb such huge numbers of impacted customers and as a result industry sources are saying that the taxpayer is likely going to have to pay hundreds of millions of pounds to fund energy purchases for Bulb’s customers.
Bulb has blamed Ofgem’s price cap, saying that it had prevented it from passing on higher wholesale costs to its customers and in its words said “it has forced us to provide energy at a significant loss.”
However, the government struck back saying that Bulb’s claims were ‘absolute nonsense’ and that it was Bulb’s fault for failing to prepare for the possibility of soaring gas prices.
Most in the industry would likely take the side of Bulb when it comes to dishing out the blame for the absolute bloodbath that has occurred in the energy retail sector. The current crisis is unprecedented with gas prices repeatedly striking record high levels that not even the direst forecasts had predicted.
Also read: Energy Suppliers blame Ofgem for the crisis in the energy market
What happens now?
With the collapse of such a large supplier, the process is different. The numbers involved mean that the SoLR process is not fit for purpose as other energy suppliers refused to take on so many new loss-making customers. Instead, the costs of the failure will have to be passed onto the taxpayer to keep Bulb operating throughout the winter.
“We have agreed with Ofgem on the appointment of special administrators for Bulb and are taking this forward in the quickest possible timeframe. The Special Administration Regime is a long-standing, well-established mechanism to protect energy consumers and ensure continued energy supply when a supplier fails.
“Bulb customers do not need to do anything, there will be no disruption to supply or current energy prices, and credit balances are protected. Our priority remains to protect consumers, which is why the Energy Price Cap will remain in place to ensure millions of customers pay a fair price for their energy this winter,” said a government spokesman.
The Government assigned administrators will now take over the running of the business while the government supplies funds to continue providing electricity and gas to its customers. The administrators will also be tasked with finding a buyer and/or other suppliers willing to take on its assets and customer base, which due to its size is likely to be sold off in pieces rather than as a whole.
British Gas takes on the customers of Neon Reef and Social Energy Supply
Shortly after the news broke about Bulb’s collapse, Ofgem announced that British Gas will take on the 35,500 customers of Neon Reef and Social Energy Supply. Both suppliers exited the market last week.
Since the start of the current energy crisis British Gas has grown its customer base by 447,600 after taking on the customers of People’s Energy, PfP Energy and MoneyPlus via the SoLR process.
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Further Reading
British Gas and Eon could be investigated by Ofgem for breaching price cap rules
Neon Reef and Social Energy Supply exit the market
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