Bulb, which is three times larger than any other energy supplier that has failed in recent years, was put under special administration on Wednesday
Bulb, which is three times larger than any other energy supplier that has failed in recent years, was put under special administration on Wednesday to avoid a disaster for its more than one and a half million customers.
A government loan of £1.69bn is keeping the lights on until a buyer is found or customers have moved to a different supplier.
The cash is going into supporting the services of administrator Teneo.
Without this “safety net”, Bulb would not have been able to keep going past the middle of December, court documents have revealed.
Given its size, Bulb will be run as normal for now, which also means it can keep trading.
While regulator Ofgem ordered the customers of other failing energy providers to be immediately transferred to other suppliers, this would be an arduous task in the case of Bulb.
Its magnitude meant Ofgem could not just let it fail.
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Justice Adam Johnson said at the High Court in London that, if left unresolved, uncertainty over the firm would be “bound to have an effect on customers, employees and suppliers”.
He added the administration was designed “to keep the energy supply company going, with a view to it being rescued if that is possible”.
Mr Johnson claimed an alternative would be to appoint a supplier of last resort: “That is thought to be impractical here, given the size and importance of Bulb as a supplier”.
Teneo estimates it will cost around £2.1bn to keep Bulb trading until the end of April 2022.
However, the cap on energy prices may have increased significantly by April, which would bring higher revenues for the business.
Court documents show Business Secretary Kwasi Kwarteng can free up more money for the company if needed.
This has put particular pressure on smaller firms that are unable to buy their gas far in advance and can thus not avoid big hits from price hikes.
Shadow business secretary Ed Miliband, calling for “a proper external review of the regulation of the market”, said: “With so many companies going bust in just two months, something not happening anywhere else in the world, it points to a systemic failure of regulation.
“Firms took risky bets and were allowed to do so and the government and Ofgem significantly deregulated the conditions of operation in 2016.
“Will the Business Secretary now take responsibility for the clear failure of regulation there has been and doesn’t it suggest there needs to be a proper external review of the regulation of the market.”
Labour MP Alex Sobel claimed: “We’re moving back to an oligopoly of energy companies who are increasing their profits whilst the supplier of last resort is socialising losses.”
Mr Kwarteng responded: “I don’t agree with his characterisation. I don’t think we’re going back to an oligopoly, as he said.
“I’ve always maintained that competition is absolutely essential in this market.
“What’s happened is there’s been a huge mismatch between the wholesale price and the retail price cap, and the retail price cap is there to protect consumers.”