The UK’s seventh largest energy supplier, Bulb, with 1.7 million consumers, today declared itself insolvent due to rising gas prices, starting a process that should include government intervention.
The company said in a statement that it asked to be handed over to “emergency management,” but assured customers that service would continue and rates would remain unchanged.
“The emergency administration is designed to protect the customers of a large energy supplier that has become insolvent,” he explained, adding that “the process of appointing special administrators has not been completed yet, but we hope they will be appointed soon.” Regulator Ofgem confirmed that Bulb “will continue to operate as usual” and that customers “will not experience service disruptions and their bills and rates will remain the same.”
If confirmed, Bulb will be the first company to benefit from an emergency management regime, during which the government provides funding to keep the company running until it is rescued, sold, or customers are transferred to other suppliers.
At the moment, about 20 energy suppliers that went bankrupt this year due to the crisis were small enough for consumers to be justified by a larger competitor.
Avro Energy, with about 580,000 customers, was by far the largest UK energy supplier to go bankrupt.
The rise in gas prices in recent months is the result of a number of factors, including a lack of supply in the UK, increased international demand due to the economic recovery from the pandemic, and reduced supplies from Russia.
“Wholesale prices have risen sharply and remain highly volatile,” said Bulb, which was founded in 2005 and has expanded to France, Spain and Texas in the United States.
Recently, news of the suspension of the approval process for the Nord Stream 2 pipeline between Russia and Germany has further pushed prices up, further putting pressure on companies in the sector.
There is currently a price limit. [‘price cap’] energy prices imposed by the UK government to avoid unfair tariffs that remain below cost for energy suppliers despite rising 12% on 1 October.
Regulatory authority Ofgem on Friday opened a public consultation and called for “proposals to ensure that the price cap reflects the costs, risks and uncertainties faced by energy suppliers.”
