The government has set aside up to £1.7 billion to fund the continued operation of Bulb Energy after the supplier collapsed in management.
A court appointed special administrators from Teneo yesterday to continue running Britain’s seventh-largest energy company so that supply and customer service for 1.6 million household customers will continue to be unaffected.
A £1.69 billion loan from the taxpayer will fund the work. Administrators say it will cost around £2.1 billion to keep Bulb trading through the end of April. They will need to buy a significant amount of gas and electricity wholesale to meet customer demand in winter.
Kwasi Kwarteng, the business secretary, could free up more taxpayer money for the company if needed, court documents show.
Bulb, founded in 2015, has been unable to withstand soaring wholesale prices, which has also led to the collapse of more than 20 other smaller suppliers since August.
Two million customers of these failed suppliers were referred to solvent companies designated as “last resort providers”. Consumers are facing a huge bill expected to run into the billions of pounds to reimburse suppliers for the costs they incur when taking on customers from failed suppliers.
However, the process was deemed impossible for the Bulb because of its size, so instead it went into a special management regime that has never been used in the energy sector.
The final bill for Bulb’s demise is unclear as special administrators will seek to minimize and offset costs where possible. They expect to sell off Bulb customers and assets, potentially in a more benign wholesale pricing environment next year.
Several companies had expressed interest in buying Bulb before it collapsed but due to debt. “We don’t want the company to stay in this temporary situation for longer than necessary,” Kwarteng said earlier.
At a hearing in London’s High Court, Justice Adam Johnson said the administration was designed to “keep the energy supply company going with the goal of rescuing the company if that’s possible.” happen”. “Designing a supplier as a last resort is ”supposedly impractical given the size and importance of Bulb as a supplier,” he said.
The judge added that £1.7 billion would be of “existential importance to Bulb”; Court documents show that Bulb would otherwise be unable to continue operating beyond mid-December.
Greg Hands, energy minister, said: “Administrators will be temporarily responsible for running Bulb and that includes ensuring, if a new owner is not found, customers are transferred to the supplier. another level safely.” It was announced last night that Interpath has been appointed administrator for Bulb’s parent company at the behest of the supplier’s largest lender.
The Sequoia Economic Infrastructure Income Fund, an FTSE 250 fund, is owed £55 million by Bulb. The loan is guaranteed by Simple Energy, Bulb’s parent company. Sky News reports that Sequoia pushed for Interpath to be appointed administrator for Simple instead of AlixPartners as it sought to protect its interests.
