The UK government has set aside nearly £1.7bn to allow energy firm Bulb to continue supplying energy to customers.
This special administration will allow the company to continue trading at this time.
Bulb will continue to be managed by Teneo the administrator, until there is a buyer or its customers are moved.
Bulb’s customers of 1.7million will be able to continue using the light source because the government loan will allow them to manage the administration.
Teneo estimates it will cost around £2.1bn to keep Bulb trading until the end of April next year.
Kwasi Kwarteng is a Business Secretary and can raise additional funds for the company, if necessary.
According to court records, Bulb could not continue beyond December’s middle without cash.
Bulb, due to its large size, will remain as normal, with no customers being transferred to any other suppliers immediately, just like other failed energy providers.
In April, it is possible that the energy price cap had increased in significant ways, which could translate into higher revenues.
It is 3 times bigger than any energy provider that failed over the last few years.
- What should I do in the event that my energy supplier fails?
Normally, Ofgem will let a firm fail before moving its customers to a different supplier.
Justice Adam Johnson of the High Court, London stated that uncertainty surrounding Bulb “will have an impact on customers, suppliers, and employees” if it is not resolved.
According to him, the administration was created “to maintain the energy supply company in operation with the possibility of it being saved if necessary”.
Then he said, “An alternative is to appoint supplier of last resort,” adding that: “That would be impossible here given Bulb’s importance as supplier.”
The judge said that the £1.7bn would be “of existential importance to Bulb”.
Mr Kwarteng stated earlier in the day that the temporary special administration system was intended to offer “an ultimate safety net for consumers to ensure supply and protect them”.
He stated to the House of Commons that “we don’t want this company in this temporary status longer than is absolutely required.”
Labour shadow business secretary Ed Miliband stated that “with so many businesses going bust in two months,” it pointed to a systemic failure or regulation.
“Firms made risky bets, and they were permitted to do so by the government and Ofgem. They significantly reduced the operating conditions in 2016.”
Miliband called on the “proper external review” of regulation to the market.
Some businesses are forced to sell their energy at a lower price than what they purchased it.
Bigger corporations tend to order their gas earlier, which helps avoid big price hikes. However, smaller businesses that cannot do so have been under increased pressure.
After a rise in gas prices, 22 energy providers have been forced to close since September 1.
Alex Sobel is Labour’s MP for Labour. He stated that “We are moving back to an industry oligopoly consisting of large energy companies which increase their profits, while the last resort supplier socializes losses.”
M. Kwarteng responded: “I have always believed that competition in this market is essential.
“What has happened is that there is a large mismatch between wholesale prices and retail price caps, which is why the retail price limit is in place to protect consumers.”
Layla Moran (Liberal Democrat MP) suggested a Northern Rock-style company for energy to buy customers of businesses that have been liquidated if current processes are not successful.
Which? Bulb customers need to feel reassured by the help offered by Which?
Which? stated that Bulb customers should wait to get more details about special administration. Lisa Barber, home products and services editor.
Its customers will see their bills reduced by the price cap. This is most likely the best deal they have at the moment.
Switching is expensive and many suppliers won’t take on new customers because of the high prices for wholesale gas, she said.
Share Your Comment Below