Ministers fear Bulb Energy collapse as energy crisis worsens – CityAM : CityAM
Government ministers are increasingly fearful that Bulb Energy (Bulb) is on the brink of collapse and could cease trading as early as next week, according to Sky News.
They are now accelerating contingency plans in case Bulb fails to find a rescue deal.
The struggling energy firm has been working with US investment bank Lazard to search for funding, or even a potential buyer, for the past few months.
So far, no agreement has been reported between Bulb and any interested parties.
The UK’s seventh largest energy firm is home to 1.7 million customers, and its demise would be the biggest casualty of the energy price crisis so far.
Sky News has revealed that rival suppliers such as Ovo, Octopus and Shell Energy Retail all reviewed Bulb’s finances in recent weeks.
If Bulb ceases trading, Ofgem could initiate a supplier of last resort process to rescue millions of stranded customers.
However, the government could also directly intervene and make taxpayers step in and fund the company while a sale is agreed to reduce long-term costs to other consumers.
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Fourteen smaller companies, supplying more than two million households, have gone bust since August.
This includes Pure Planet, Daligas, Colorado Energy and Goto Energy, who have all stopped operations in the past three weeks alone.
CNG Energy’s retail arm is also reportedly in trouble.
The besieged energy sector has been facing spiralling wholesale costs, with shortfalls in global supply and rising demand resulting in record prices.
The firms have been unable to spread the burden to consumers, who are protected by Ofgem’s £1,277 per year price cap.
Bulb has played down suggestions that a collapse is imminent and told City A.M. that options remain on the table.
A spokesperson said: “Our discussions with multiple parties to secure additional funding continue to make good progress and we’re encouraged by the drop in wholesale energy prices. We expect the government to monitor wholesale prices and their effect on the whole industry, but ministers and Ofgem have been clear we must emerge from the energy crisis with a competitive and innovative market, rather than a return to the oligopoly of the past.”