Save, make, understand money

Household Bills

Lights go out at energy supplier Bulb

Emma Lunn
Written By:
Emma Lunn

The UK’s seventh largest energy supplier, which supplies about 6% of the UK market, has announced plans to go into special administration.

Special administration is a modified insolvency regime that provides an administrator with special objectives such as the continuity of critical services – the supply of energy in Bulb’s case. These objectives take priority over the objectives in a normal administration.

The special administrator is required by the government under the 2011 Energy Act to continue to supply energy to customers and to protect customer credit balances. The process to appoint special administrators is not yet complete but Bulb expects them to be appointed shortly.

A statement on Bulb’s website said: “Special administration is designed to allow Bulb to continue to operate as usual so you don’t need to take any action. Your tariffs are not changing, and the price cap applies to all consumer energy tariffs. If you pay for your energy by top up, your top ups will continue to work as normal. If you’re in the process of switching to or from Bulb, your switch will continue.

“We’re expecting a high volume of calls today, so please only call if it’s an emergency, you’re in a vulnerable situation or you are struggling to pay your bills. That way, we can help those who need it most at this time. And please bear in mind that response times will be longer than normal.”

Bulb’s international businesses in France, Spain and Texas will continue trading. They are separate businesses from Bulb UK and are not immediately affected by the company entering special administration in the UK.

Rumours of Bulb’s demise have been circulating for several weeks, following the collapse of more than 20 energy firms since August when wholesale energy prices started to rise to unprecedented levels.

Bulb initially sought investors but high wholesale prices and the energy price cap – designed to protect customers – currently mean suppliers provide energy at a significant loss and so are not attractive to investors.

Justina Miltienyte, energy policy expert at Uswitch.com, said: “This signals the tipping point of the UK energy crisis. With Bulb’s 1.7 million customer base, over four million people have now been directly impacted by the turbulent energy 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 combined with a competitive offering for consumers.

“Ultimately this demise wasn’t caused by a badly run business model. Instead, Bulb was choked off by the way the government decided to structure the current energy market with the price cap.

“Instead of Ofgem picking a supplier of last resort, as has been the case with smaller providers, Bulb will continue operating as normal. The most important thing for consumers to know is that their energy supply will continue to run as it always has done, and any credit balances will be protected.

“Affected consumers should not cancel their direct debit – you will continue to receive energy and be billed for it, as normal. It’s also worth noting that Bulb customers will be protected by the current price cap, until April 2022.”