Bulb Energy, who supplies 1.7 million UK customers, collapsed on Monday, the firm announced.
They will be placed into the government’s special administration process, the first energy company to do so. This means they will effectively become a nationalised company until a permanent solution can be found. At present, this special administration process will work to seek either a rescue deal, a restructuring of the business, or a sale. The process will be funded by UK taxpayers.
To ease customer concerns, a spokesperson for Bulb said: “We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members. If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”
Bulb was founded in 2015 and quickly rose to become the UK’s 7th largest energy supplier. They now join the growing list (twenty five and counting) of energy suppliers going bust in the wake of the energy crisis. This leaves a total of 4.2 million customers who have found themselves swapped to a different supplier in the space of only three months.
Their collapse this morning might’ve surprised customers, but many within the industry have expected this. They’d been trying to shore up their finances for several weeks and just last month, it was reported that OVO Energy, Octopus Energy, and Shell Energy had all shown interest in buying the now-stricken firm, but a deal never materialised.
Why are so many energy suppliers collapsing?
A leading cause behind Bulb and other suppliers going bust is the escalating cost of wholesale gas, which has skyrocketed this year. With the price of gas rising from 50p per therm at the beginning of the year to 400p per therm, it was always going to be a struggle for energy suppliers.
The UK’s price cap on domestic tariffs hasn’t made it any easier either. As energy suppliers compete to offer better deals to customers, they’ve faced monumental losses in supplying energy for lower prices than it costs to generate. This has caused a vicious cycle of companies unable to charge more for energy whilst having to pay ever-increasing amounts for the energy they supply.
There is real concern that the growing line of customers being moved to other suppliers will see energy bills rise for customers of suppliers still standing amidst the crisis. However, Bulb’s sheer size means this isn’t an option, as a massive influx of their customers to rival suppliers would be likely to overwhelm them.
Because of this, the special administration process will see a company appointed to oversee Bulb’s business operations and to guarantee an uninterrupted energy supply for their customers.
Pressure is growing on the UK government to find a solution to the energy crisis. Earlier today, a spokesperson for Boris Johnson said: “We’ve put in place the powers and robust processes to ensure customers don’t experience disruption to their energy supply and costs are minimized if a supplier does exit the market.”
Ofgem (The Office of Gas and Electricity Markets), have yet to make a statement.