Bulb Energy announces administration measures

23rd November 2021

Bulb Energy, which has 1.7 million customers, has announced that the firm will be put into administration.

The energy firm has confirmed it will enter the special administration regime (SAR), becoming the first energy supplier to do so.

The decision to place a company into a Special Administration Regime is made by the court upon an application by Ofgem with the consent of the Secretary of State.

A SAR is a temporary arrangement that provides an ultimate safety net to protect consumers and ensure continued supply. The government does not want Bulb to remain in this temporary state longer than is absolutely necessary.

The court appoints administrators to manage the supplier throughout the period of administration. The government provides funding to the administrators during this period, if necessary, to enable them to continue to supply energy to their customers and manage the company’s exit from the administration. This process is set out in the Energy Act 2004 and the Energy Act 2011 as well as in insolvency law, such as the Energy Supply Company Administration Rules.

The administrators’ role is to ensure that customers’ supply is protected throughout, with energy supplies continuing to be provided at the lowest reasonable practicable cost until it’s possible to end the administration through the rescue of the company, its sale, or the transfer of its customers.

This will ensure that customers’ energy supplies continue to flow as usual and that the overall energy market remains stable. The government would provide the funding necessary to ensure that the administration is managed in a way that protects customers’ supply.

The government can recoup these costs at a later date, ensuring that we get the best outcome for Bulb’s customers and the British taxpayer.

This will be done in a way that minimises the impact on consumers and takes into account the solvency of industry participants, like transmission operators and shippers.

An Ofgem spokesperson said: “Customers of Bulb do not need to worry – Bulb will continue to operate as normal. Ofgem is working very closely with Government. This includes plans for Ofgem to apply to Court to appoint an administrator who will run the company. Customers will see no disruption to their supply and their account and tariff will continue as normal. Bulb staff will still be available to answer calls and queries.”

Commenting on the insolvency Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “The lights look set to go out at Bulb, in the latest blow for energy customers. With 1.7 million customers, 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. Bulb customers have lived with rumours of imminent collapse for weeks. The government has been trying to put contingency plans in place, after it emerged the company was under threat, but it seems these plans have reached the end of the road.”

“More details are expected tomorrow, but we know the special administration process will differ from insolvency as usual, because the administrator has a duty to consider the interests of customers and continue to supply energy at the lowest possible cost.”

“The level of debt held by the company could mean it is effectively part nationalised for a period, so the taxpayer is getting involved in the currently unrewarding business of energy supply.”

According to Ofgem, in cases like this you will be free to switch to another supplier, and your credit balance will be protected. It’s unclear whether your current tariff will be honoured or whether you will end up being moved onto one linked to the energy price cap.

It’s clear that with wholesale prices going through the roof, it’s proving nigh-on impossible for companies to make money under the current price cap. It raises the risk that we could see a significant hike in April next year.”

Separately Ofgem has announced that it has appointed British Gas to take on customers of Neon Reef and Social Energy Supply.

Neil Lawrence, Ofgem’s Director of Retail, said “I am pleased to announce we have appointed British Gas for the customers of Neon Reef and Social Energy Supply. We understand that this news may be unsettling for customers, however they do not need to worry. Their energy supply will continue as normal, and customer credit balances will be honoured.”

“Customers’ energy supply will not be interrupted and British Gas will be in contact with customers over the coming days with further information. Once the transfer has been completed, customers can shop around for another deal if they wish to.”