Biggest supplier yet is put in ‘special administration’

Britain’s seventh biggest energy supplier Bulb, which provides gas or electricity to 1.7 million households, plans to enter special administration as it was squeezed out of the market.

The company becomes the latest and the largest in a list of more than 20 suppliers that have failed since the start of September as gas prices soared.

Bulb said it would back regulator Ofgem’s efforts to appoint a special administrator – 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,” the company said yesterday. “If you’re a Bulb member, please don’t worry, as your energy supply is secure and all credit balances protected.”

Bulb’s parent company, Simple Energy, will enter administration. However Bulb’s businesses in France, Spain and the US will continue trading.

Bulb becomes the first energy supplier to rely on regulator Ofgem’s special administration regime.

In the past Ofgem has dealt with collapsed energy suppliers through its supplier-of-last-resort process, which moves thousands of customers from the failed company to another supplier.

However the SOLR process has never dealt with a company as big as Bulb. The previous 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 1.7 million 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.

According to reports from Sky News, Bulb’s biggest creditor was in discussions about refinancing the business, however, it appears they have now withdrawn that support.

Customer credit balances will be protected, Bulb said.

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 supplies were not affected by the collapse of a firm.

“We have put in place robust processes to ensure customers don’t experience any reduction to their supply and that costs are minimised if a supplier does exit the market,” the prime minister’s official spokesman said. “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.”

Justina Miltienyte, energy policy expert at Uswitch.com, said: “This signals the tipping point of the UK energy crisis.

“With Bulb’s 1.7m customer base, more than four million people have now been directly impacted by the turbulent market.

“But it’s not just Bulb’s size as the seventh largest supplier that makes this so significant.

“Unlike some of the smaller suppliers who recently ceased to trade, Bulb operated with a strong business model.”

Energy supplier Bulb is the latest to crash and burn.