Bulb Energy could be in the hands of an administrator hours after the regulator asked the courts for a consulting firm to run it after it collapsed on Monday.
Britain’s seventh supplier is set to become the first energy company to go through a special administrative process so it can continue to supply gas and electricity to its 1.7 million customers during the winter after going bankrupt on Monday .
Energy regulator Ofgem has proposed that global consulting firm Teneo take over Bulb’s management while the fate of its gas and electricity customers is decided. A court hearing is expected to take place later Wednesday before an appointment is confirmed.
Kwasi Kwarteng, the business secretary, told MPs in the House of Commons that the new regime is a temporary arrangement, which provides an ultimate safety net to protect consumers and ensure continued supply.
We don’t want this business to be in this temporary state any longer than absolutely necessary, he added.
Energy industry sources believe it could take between six weeks and six months for the fallout from the Bulb collapse to be resolved by the administrator and a team of banks, which are expected to be named in the coming weeks.
Ofgem urged Bulb customers not to worry and said they will not see any disruption in their supply, their pricing plan will remain the same and all outstanding credit balances, including amounts owed to customers who have recently changed, will be honored.
The provision for a special administrator for energy suppliers was first enshrined in legislation in 2011, but has never been used, in part because previous supplier bankruptcies have been small enough to find a new one. buyer relatively quickly.
Bulb is by far the largest energy supplier to go bankrupt after a chain of more than 20 companies went bankrupt since September. The cost of running the business during the winter, borne by the Treasury, can run into the hundreds of millions of pounds for UK taxpayers. The administration could also lead to an increase in energy bills if a part of these costs is shared in the energy market.
In total, the cost of managing the impact of the energy market crisis on bankrupt energy providers could reach around $ 2 billion this winter, according to Investec analyst Martin Young. But the final tally has remained unknown as Bulbs’ failure takes us into uncharted waters, he said.
Staff and customers were told by Bulb on Monday that the company made the difficult decision to agree to a special administrative process after its plans to raise more funds were dashed by the energy crisis.
The company urgently needed fresh funds as debt repayments loomed, but investors were reluctant to back energy companies amid record gas and power prices, and may not be convinced by the recent performance of Bulbs.
A spokesperson for the Department of Business, Energy and Industrial Strategy said: The special administration regime is a long-established, well-established mechanism to protect energy consumers and ensure continuity of supply in energy in the event of failure of a supplier.
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