Home » Energy Supplier Bulb To Enter Special Administration – Business Live

Energy Supplier Bulb To Enter Special Administration – Business Live

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13:47

Citizens Advice: UK energy market needs reforms

Gillian Cooper, head of energy policy for Citizens Advice, says “serious questions must be asked” about the state of the UK energy market and how it is regulated.

“Bulb customers will be protected by the special administration process and they shouldn’t see much change to their service for now.

But when the country’s seventh largest supplier fails, serious questions must be asked about the state of the market and how it’s regulated.

It’s clear reforms are needed to prevent consumers and taxpayers from paying the price for supplier failures in future.”

Walid Koudmani, market analyst at financial brokerage XTB, says Bulb’s collapse shows the ‘bleak’ situation in Britain’s energy market, which could leave consumers with much less choice.

“Bulb energy’s collapse continues to highlight the bleak situation which has already seen a number of other energy providers fold under increasing costs and the inability to provide advertised services to their customers.

As today’s announcement further reduces competition in the market, it could lead to a scenario where only a small number of major players are left in the energy market once issues are settled and things return to normal.”

Updated

13:20

Full story: Bulb Energy, which supplies 1.7m customers, collapses into administration

Bulb Energy has gone bust and will be placed into a special administration process to manage the fallout of the biggest energy supply collapse on record.

The energy regulator drew up plans over the weekend to put the company into a special administration process designed to protect Bulb’s 1.7 million household customers, according to industry sources.

A statement from the company on Monday said.

“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 to members,”

“If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected,”

The UK day-ahead gas price has soared this year. Photograph: Refinitiv

The company’s collapse has been long expected by industry rivals, which described the company as the “walking dead” after it struggled to find new investment, or a willing buyer, before the UK’s looming winter energy crisis.

Here’s the full story:

13:12

The special-administrator process being used with Bulb is reserved for firms that are too important to fail when other options aren’t possible.

Bloomberg explains:

This is the first time the measure has been used in Britain and comes in the wake of 20 energy-company failures since the start of August. It’s a sign the market is struggling to cope with the effects of higher power and natural-gas prices that are squeezing margins for suppliers and pushing them out of business.

“Special administration is designed to protect the customers of a large energy supplier that’s become insolvent,” Bulb said on its website.

No special administrator has been appointed yet, but Bulb expects one will be soon. The move will limit the risk of market chaos created by trying to quickly transfer a large number of customers to another supplier.

Bloomberg UK (@BloombergUK)

BREAKING: U.K. energy supplier Bulb collapses and will be put into special administration to support its 1.7 million customers t.co/lzndJRHK6m pic.twitter.com/LWtB7xFTWM

November 22, 2021

Updated

13:10

Uswitch: This is the tipping point in UK energy crisis

Justina Miltienyte, energy policy expert at Uswitch.com, says Bulb’s collapse is a ‘tipping point’, caused by the price cap which has protected UK customers from soaring wholesale prices.

“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.

Miltienyte also explains that Bulb’s collapse is different than previous failures – as its customers won’t now be passed onto another supplier:

“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.

Is it worth switching suppliers? Miltienyte argues that customers should ‘stay put’ and see how the situation develops:

“Technically, you can switch suppliers, but it is worth bearing in mind that there are unlikely to be better deals available elsewhere. You’re probably better off staying put and waiting for the dust to settle on the current situation.

“The administrator may decide to close the supplier down in the future, and move customers elsewhere. But customers will be kept informed by Ofgem and the administrators about what will happen next.”

12:59

Bulb says the UK’s energy price cap hampered its efforts to win support from investors, forcing it into special administration.

In its blog post, it explains that the surge in wholesale gas prices means suppliers are operating at a loss:

When we started exploring fundraising options, we were delighted to receive lots of interest from investors to fund our business plans and future growth. However, the rising energy crisis in the UK and around the world has concerned investors who can’t go ahead while wholesale prices are so high and the price cap—designed to protect customers—currently means suppliers provide energy at a significant loss.

Wholesale prices have skyrocketed and continue to be extremely volatile. The gas supply shortage combined with lower exports from Russia and increased demand means they remain high and unpredictable. Prices have hit close to £4.00 per therm recently, compared with 50p per therm a year ago.

We’ve always been big supporters of the idea of a price cap to protect customers, but the current price cap is set at a level around 70p per therm, well below the cost of energy.

Those high energy costs had already forced 21 energy companies to collapse since the start of September – although none were as large as Bulb.

Bulb also warns that more suppliers are expected to fail this winter:

The news last week about Nord Stream 2 has sent gas prices back up again.

Nord Stream 2 is a new gas pipeline from Russia to Europe which must be approved by Germany and the EU. Last week, Germany suspended its approval process, and there’s growing geopolitical pressure to scrap the project.

As a result, the industry has seen many suppliers fail over the past few months and many more are expected to do so over the winter.

12:47

Bulb: We will continue to operate business as usual

Bulb has tweeted that moving into special administration is a ‘difficult decision’.

The company adds that it will continue to operate as usual. It asks customers to only contact them in an emergency, or if they’re in a vulnerable situation or struggling to pay their bills.

Bulb (@BulbUK)

We’ve made the difficult decision to support Bulb being placed into special administration. t.co/8HQTYttOvm. We want to reassure you there will be no change to your energy supply (1/4)

November 22, 2021

Bulb (@BulbUK)

We will continue to operate business as usual. You do not need to take any action. Your credit balances will be protected and our tariffs are not changing. If you are on a prepay meter, top-ups will continue to work as normal. (2/4)

November 22, 2021

Bulb (@BulbUK)

We’re expecting a high volume of calls. Please only call if it’s an emergency, you’re in a vulnerable situation or you’re struggling to pay your bills. That way, we can help those who need it most. You can contact us via the Bulb App or online at t.co/4Q7sMGEeaQ (3/4)

November 22, 2021

Bulb (@BulbUK)

Thanks to all our members and to our team who continue to work so hard. If you’d like to read more about the recent news, we’ve written a bit more about it on our blog: t.co/UkTjovAryp. And if you’re in contact with our team, please be kind. (4/4)

November 22, 2021

12:39

Energy firm Bulb to collapse into special administration

Newsflash: Bulb, the UK’s seventh biggest energy firm, is to enter special administration.

Bulb will become the biggest UK supplier yet to collapse following the surge in global gas prices.

The company has 1.7 million household customers, and says their supplies will be protected.

A Bulb spokesperson says:

‘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 to members.

If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.’

Adam John (@amjohn94)

🚨🚨🚨 Major energy sector news breaking this afternoon. Bulb, which serves 1.7m customers, is to become the first energy supplier to enter the special administration regime (SAR).🚨🚨🚨#energytwitter #energy

November 22, 2021

In a blog post, the company explains that:

Special administration is designed to protect the customers of a large energy supplier that’s become insolvent. The special administrator is required by the Government under the 2011 Energy Act to continue to supply energy to customers, and will protect customer credit balances. The process to appoint special administrators is not yet complete but we expect them to be appointed shortly.

Our International businesses in France, Spain and Texas will continue trading. They are separate businesses from Bulb UK and are not immediately affected by us entering special administration in the UK.

Updated

12:14

Bundesbank warns of inflation spike towards 6%

Photograph: Pavlo Gonchar/SOPA Images/REX/Shutterstock

Germany’s central bank has warned that inflation could rise towards 6% this month, almost three times over target, even as the economy slows.

The Bundesbank said in its monthly report that consumer prices saw “an exceptionally steep rise in the third quarter of 2021”.

This was due to the surge in energy prices, and costlier industrial goods as supply chain shortages and shipping fees rise.

The Bundesbank says:

Prices saw a further substantial rise in October. Annual headline inflation rose from 4.1% in September to 4.6%.

This month it could even reach just under 6% (CPI: just over 5½%), of which just over 1½ percentage points would be attributable to the two one-off effects.

The Bundesbank fears that Germany’s economic recovery could pause this quarter (a worrying sign for the wider European and global economy), saying:

Initially, there will probably be a brief pause in the economic recovery. From today’s perspective, GDP could broadly stagnate in the final quarter of 2021, after economic output already stopped rising over the course of the third quarter.

The report also predicts that inflation will “decline perceptibly” earlier next year, although the bulk in gas prices will probably only be passed on to consumers after the turn of the year.

Inflation is not expected to fall back to the eurozone’s 2% target soon.

While, as things stand, headline inflation is likely to gradually continue falling in the following months, it could remain significantly above 3% for an extended period of time. It is conceivable that core inflation will be substantially over 2%.

Zoe Schneeweiss (@ZSchneeweiss)

Be ready for a German inflation spike close to 6%, the Bundesbank says t.co/ce8yjS2Rj5 pic.twitter.com/m2hcBzWz1e

November 22, 2021

The Bundesbank also flagged that the global economic recovery lost significant momentum in the third quarter of 2021.

The Delta variant, world supply chain tensions, the crisis at China’s property developer Evergrande, and hurricanes in the US were all factors, it says:

Severe shortages of intermediate goods hindered economic activity in many regions. As the delta variant of the coronavirus spread, pandemic-induced burdens in some countries were also exacerbated again – a situation compounded yet further at times by other inhibiting factors.

For instance, economic growth in China also slowed due to problems on the real estate market. In the United States, weather-induced production losses and the expiry of fiscal transfer payments were partly responsible for weaker growth.

Recovery in the United Kingdom also continued at a substantially reduced pace. In the euro area, meanwhile, gross domestic product (GDP) saw renewed strong growth, but here, too, the recovery lost significant momentum over the course of the quarter.

Holger Zschaepitz (@Schuldensuehner)

Be ready for German #inflation spike close to 6%, Bundesbank says. About 1 1/2 points of that is due to temporary factors BUT inflation set to stay >3% for a ‘longer period of time.’ t.co/ZTLzrDONC0 pic.twitter.com/BVgXaneqv8

November 22, 2021

12:11

Sky News is reporting that Bulb, Britain’s seventh-biggest energy supplier, is facing collapse within days amid eleventh-hour talks between the government and the company’s biggest secured creditor.

Here’s the story:

Sky News has learnt that the company, which launched in 2015 and has amassed 1.7 million customers, is expected to appoint insolvency practitioners imminently.

The precise timing remained unclear on Monday because of the complexity of the looming administration process and ongoing talks between the government and Sequoia Economic Infrastructure Income Fund, which has an outstanding secured loan of roughly £50m to Bulb’s parent company Simple Energy, according to industry sources.

Sequoia is said to have demanded the repayment of its loan prior to Bulb being placed into administration, they added.

A range of government departments and Ofgem, the industry regulator, began accelerating contingency plans for the collapse of Bulb last month.

Under these plans, Bulb could be placed into a resolution process called a Special Administration Regime (SAR), which would guarantee funding for the company from the Treasury while administrators sought a restructuring deal, buyer or transfer of the customer base, Sky’s Mark Kleinman adds.

More here.

Mark Kleinman (@MarkKleinmanSky)

Exclusive: Bulb, Britain’s seventh-biggest energy supplier, is close to collapse, a move that will lead to 1.7m UK households being forced to change energy supplier. The government is in talks with Bulb’s secured creditor about the fate of its £50m loan to Bulb. Full story soon.

November 22, 2021

Bulb’s future has been unclear for weeks, as rescue talks with a small number of potential buyers have failed to reach a deal.

Given Bulb’s size, industry insiders have suggested regulator would need to use a special administrator to keep the company running over winter before prices normalise.

Updated

11:42

Oil is trading close to a seven-week low this morning, with Brent crude below $79 per barrel.

That’s around 9% lower than the three-year highs set last month, when Brent hit $86.70 per barrel.

And motoring bodies are pushing fuel retailers to pass these savings onto drivers, who have faced record prices at the pumps.

Simon Williams, RAC fuel spokesperson, said over the weekend:

“In the last few days the wholesale price of petrol has fallen steeply.

“The biggest retailers are in a great position to cut prices and ease the burden being felt by drivers throughout the UK who are paying £80 for a full 55-litre tank.

Interactive Investor’s Victoria Scholar has more details:

Victoria Scholar (@VictoriaS_ii)

The #RAC has called on fuel retailers to cut prices at the pump after a fall in wholesale petrol prices. It says the av. price of unleaded petrol is too expensive, with drivers paying £80 to fill up a 55-litre tank. With margins rising, the RAC says this is very harsh on drivers. pic.twitter.com/PzU0HoUmeX

November 22, 2021

11:08

Gas prices ease amid COVID-lockdown concerns

Gas prices have eased back this morning, on speculation that lockdowns will hit demand for energy.

The contract for next-day delivery in the UK down 3.2% at 208p per therm, away from the one-month high of 240p/therm set last week.

European prices are also lower, with the Dutch benchmark contract for December delivery down 5.5% this morning.

Here’s Reuters’ take:

  • “Corona fears are highlighted heavily now,” a gas trader said.
  • Market players are monitoring the return of restrictions to stem the spread of COVID-19 as cases rise significantly across Europe.
  • Germany has declared an emergency status and there is a possibility that it could be next along with France to face some degree of lockdown. Austria and the Netherlands have already implemented full or partial lockdowns.
  • “Our outlook for today is for prices to continue to remain under bearish pressure with the potential reintroduction of new lockdowns across Northwest Europe as case numbers increase by the day,” Refinitiv analysts said.

Despite today’s falls, wholesale gas prices are still over three times higher than at the start of this year.

Henning Gloystein, director at Eurasia Group, warns that the colder weather will push demand up.

Henning Gloystein (@hgloystein)

Cold weather has arrived in #Europe and is seen to last 2 weeks. That will raise heating #gas demand. Even if temperatures return to the seasonal norm in Dec, that norm will be as cold as the cold weather now, meaning demand and prices stay high, with risks of a #gasshortage pic.twitter.com/1errAIRGsI

November 22, 2021

Wholesale electricity prices have also surged this year:

Javier Blas (@JavierBlas)

EUROPEAN ENERGY CRUNCH: The electricity crisis in Europe is coming back as cold weather settles over the continent. Spain will pay the **2nd highest ever** day-ahead electricity on Monday (>€236 per MWh). France, Italy and Germany also paying high prices | #EuropeanEnergyCrunch pic.twitter.com/6XPtceEcAc

November 21, 2021

10:32

London Heathrow Airport. Photograph: Doug Peters/PA

The boss of the British Airways owner, IAG, has said its transatlantic bookings had already reached nearly 100% of 2019 levels after the United States dropped restrictions earlier this month, Reuters reports.

Luis Gallego told the Airlines UK conference that the group was recovering, and he expected a return to pre-pandemic flying levels by 2023.

He said:

“Now as the world opens up, we are growing our capacity,.

Transatlantic bookings have already reached almost 100% of 2019 levels. I expect North Atlantic routes to reach full capacity by next summer.”

Gallego warned however that a move by London’s Heathrow Airport to hike charges could hit the recovery:

“If the rise in landing charges goes ahead, I know IAG would not be alone in reconsidering our airlines’ use of Heathrow as a port.”

More here: