Energy crisis: Ed Miliband grilled on 'nationalisation' of companies
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The Government is believed to be speeding up plans for the collapse of Bulb, the country’s seventh-biggest energy supplier. If the company falls into administration in the coming days, it could be up to the taxpayer to keep it afloat through a temporary nationalisation.
It is understood the Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury are working on contingency plans to use taxpayers’ money if the search for new funding, in hands of investment bank Lazard, turns out to be unsuccessful.
A Bulb spokesperson said on Friday: “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.”
According to Sky News, industry sources said talks with a small number of potential buyers were ongoing but that others had pulled out in recent days.
If Bulb does not secure its own funding by next week, it is understood Ofgem will seek a so-called Supplier of Last Resort (SOLR). This would involve other energy companies bidding to take on Bulb’s customer base.
But Bulb, launched in 2015 by Amit Gudka and Hayden Wood, commands a 6 percent market share of the household energy market with an estimated 1.7 million household customers.
Given its size, the prospect of a SOLR is unlikely.
If no other firm has absorbed Bulb within seven days, the Treasury and the taxpayer will become responsible for financing the firm.
This could potentially be the case in less than two weeks and would make Bulb the first energy company to enter Ofgem’s Energy Supply Company Administration regime.
While it would only be a temporary measure until a longer-term solution is found, it would still involve the courts appointing a special administrator who, in a bid to prevent bills from rising sharply, has to put consumers’ and creditors’ interests first.
Bills are a key concern for customers. Bulb announced in August its prices would be going up on October 1 to line up with the regulator’s price cap, which grew by 12 percent.
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A spokeswoman for Ofgem said: “There has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers.
“We know this is a worrying time for many people and our number one priority is protecting customers.
“In the event a supplier fails, Ofgem and government have robust processes in place to ensure customers’ electricity and gas supply continue and domestic customers’ credit balances are protected.”
A Government spokeswoman added: “Ofgem — as the expert regulator — is monitoring the situation across the energy market for the continued impacts on high worldwide wholesale gas prices.
“We have put in place the powers and robust processes to ensure customers do not experience any disruption to their energy supply and that costs are minimised if a supplier should exit the market.”
Taxpayers’ involvement through Ofgem’s Energy Supply Company Administration regime would buy administrators time to seek a restructuring deal for Bulb, which supplies 100 percent renewable electricity and 100 percent carbon-neutral gas.
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