UK energy supplier Bulb set to go into administration
15:54, 22 November 2021
UK energy supplier Bulb said Monday that it has gone into special administration after the firm, like many others, has struggled to keep on top of rising costs.
The news will affect its 1.7 million customers. However, the company reassured its members in a post on its website that they do not need to do anything for now.
The process to appoint special administrators is not yet finished but will happen soon, the company said.
“Special administration is designed to allow Bulb to continue to operate as usual so you do not need to take any action,” it said on its website. “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”.
The company highlighted that the price cap designed to protect customers, currently set at a level around 70p per therm, is “well below the cost of energy” and as a result “means suppliers provide energy at a significant loss”.
A spokesperson for energy regulator Ofgem added: “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.”
Bulb is the latest energy company in the UK to flounder as a result of soaring wholesale prices. The price cap also has meant the energy firms have not been able to pass on the higher costs.
“Prices have hit close to £4.00 per therm recently compared with 50p per therm a year ago,” Bulb noted in the post.
“The news last week about Nord Stream 2 has sent gas prices back up again. Nord Stream 2 is a new gas pipeline from Russia to Europe, which must be approved by Germany and the EU. Last week, Germany suspended its approval process, and there is growing geopolitical pressure to scrap the project. As a result, the industry has seen many suppliers fail over the past few months and many more are expected to do so over the winter,” Bulb added.
Bulb noted that its international businesses in France, Spain and Texas were separate from the UK business and would not be affected immediately.
“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,” said Robert Buckley, head of relationship development at energy market intelligence and analysis company Cornwall Insight. “Bulb was challenging the industry’s status quo, building up its customer base from a small supplier into a larger one. It will be undoubtedly a sad and worrying time for anyone who works at the supplier”.
Buckley said the failure of Bulb illustrates the stress suppliers have been under this autumn.
“Suppliers have been squeezed with the default tariff price cap limiting the amount they can charge and a wholesale market price that has far exceeded this,” he said.