Bulb Energy Ltd, the 100% renewable energy firm, has collapsed after failing to secure additional funding after last-minute talks between the government and the company’s largest secured creditor stalled.
The company, which launched in 2015 and supplies 1.7 million customers, has entered a special form of administration due to its size and the reluctance of other suppliers to take on so many new customers.
“The lights look set to go out at Bulb [as] no other company is keen to step in as a supplier of last resort, which means the taxpayer is likely to take the strain, so we might all end up paying a price,” said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
Bulb will be the first company ever to use the special administration regime (SAR).
“It has never been used before because a large energy supplier has never been insolvent,” said Ofgem.
Bulb added: “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.”
Sequoia Economic Infrastructure Income Fund (LSE:SEQI), Bulb’s largest creditor, has an outstanding loan of approximately GBP50mln that according to industry sources was demanded to be repaid prior to the administration plans.
Ofgem and government departments began speeding up contingency plans for the demise of Bulb last month, with Octopus Energy, Ovo Energy, Shell Energy, and Centrica (British Gas’ owner) all sounded out as possible acquirers of Bulb’s client base.
“In the event a supplier fails, Ofgem and the government have robust processes in place to ensure customers’ electricity and gas supply continue, and domestic customers’ credit balances are protected,” said an Ofgem spokesperson.
Soaring wholesale gas prices have now spelled the death-knell for almost twenty small suppliers that have been unable to pass on the additional costs, which at the peak were up by 600% this year.
Approximately two million households have had to switch suppliers as a result of the crisis.
Before Bulb, the largest to fail was Avro Energy with a customer base of roughly 580,000 households.
Avro’s customers who paid for gas and electricity in advance via direct debit schemes were left GBP90mln short when the energy company collapsed in September, according to The Telegraph.
Ofgem today has appointed British Gas to take on Neon Reef Ltd and Social Energy Supply Ltd’s customers following the cease of both companies earlier this month.
Neon Reef served 30,000 domestic electricity customers before the conclusion of its energy supply, with the latter having provided approximately 5,500 customers with power.