Bulb has been put into special administration, as it becomes the largest of more than 20 suppliers to collapse since the start of the year, amid the soaring price of gas.
Britain’s seventh biggest energy supplier, which provides gas or electricity to 1.7 million households, has opted for a process designed to protect customers when a large energy supplier can no longer trade.
“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,” the company stated this afternoon.
“If you’re a Bulb member, please don’t worry, as your energy supply is secure and all credit balances are protected.”
Bulb’s parent company, Simple Energy, will also enter administration, however Bulb’s international businesses in France, Spain and the US will continue trading.
It becomes the first company to rely on regulator Ofgem’s special administration regime.
An administrator will be appointed to run the company until it is either rescued, sold, or has its customers transferred to other suppliers.
According to reports, Bulb’s biggest creditor was in discussions about refinancing the business, however, it appears they have now withdrawn that support.
Before Monday the biggest supplier to collapse was Avro Energy, which had 580,000 customers.
Insiders at other big suppliers have in recent months worried that Ofgem might force them to take over Bulb’s customers – a hugely expensive process.
It could have created a domino effect, where the collapse of one supplier puts too much pressure on an otherwise stable rival, which itself ends up failing.
To avoid this, Ofgem will now use this special administration process to find an administrator for Bulb, with the backing of Business and Energy Secretary Kwasi Kwarteng.
The administrator will continue to run the company until it can be sold off, the customers join another supplier, or it can be restructured.
Under the scheme’s rules, the business secretary can give or loan money to Bulb and other suppliers in special administration.
Conor Forbes, head of policy with Advice Direct Scotland, said: “A major supplier like Bulb announcing that it will be entering special administration will inevitably cause fresh concern about the future of the UK’s energy suppliers.
“But the key advice to all customers is to do nothing at this stage – when any energy firm collapses, there is no loss of energy supply and customers do not lose any money owed to them.”
In July this year, Prime Minister Boris Johnson visited Bulb’s offices, where he said that the company was “leading the way in the renewables revolution.”
Downing Street has now said that “robust” systems are in place to ensure customers’ energy supplies were not affected by the collapse of a firm.
“We have put in place the powers and robust processes to ensure customers don’t experience any reduction to their energy supply and that costs are minimised if a supplier does exit the market,” the Prime Minister’s official spokesman said.
“As the public would expect, we have looked at the system given some of the challenges and the speculation about the impact it’s having even on large suppliers and we believe we have the right, robust system in place so that customers don’t see disruption to their energy supply and we still are able to keep cost disruption to a minimum.”
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