Customers are being warned that energy supplier Bulb could collapse within days.
The company is the latest supplier in the UK to be affected by soaring gas prices and will appoint insolvency practitioners “imminently”, according to Sky News.
It is believed that talks are continuing between the government and Sequoia Economic Infrastructure Income Fund, which has loaned Bulb’s parent company around £50million.
Industry sources have said that Sequoia demanded the repayment of its loan prior to Bulb being put into administration.
Attempts have reportedly been made for the sale of Bulb and requests put to the government to create a “rescue support package”.
What is ‘special administration’?
Bulb launched in 2015 and is now the seventh largest energy supplier in the UK with around 1.7 million customers nationwide.
It provides 100% carbon-neutral gas and renewable electricity through solar, wind and hydro sources.
Bulb has confirmed that it has made the “difficult decision” to support being placed into special administration.
This process has been designed so the supplier can continue to operate as normal while protecting its customers.
The special administrator is required to continue supplying energy to customers and to protect customer credit balances.
Although special administrators have not been appointed yet, it is expected this process will be completed “shortly”.
In a statement online, the Bulb team wrote: “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.”
The appointed administrator will run the company until it is either rescued, sold or has its customers transferred to other suppliers.
We’ve made the difficult decision to support Bulb being placed into special administration. https://t.co/8HQTYttOvm. We want to reassure you there will be no change to your energy supply (1/4)
— Bulb (@BulbUK) November 22, 2021
Energy prices soaring
Millions of households have been affected by collapses this year caused by rising wholesale energy prices.
Bulb’s potential collapse would have the biggest household impact so far, and also put around 1000 people’s jobs at risk.
In just the past few months, around 20 energy suppliers have gone out of business, including Daligas, Igloo and Pure Planet.
The price of gas has risen by as much as five times since the start of the year and continuing rises may push more businesses to collapse.
The companies are forced to pay higher prices for gas which is not possible with the profits they receive from customers.
The Bulb statement continued: “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 per therm recently, compared with 50p per therm a year ago.”
What should you do if your supplier collapses?
Ofgem, the UK government regulator for electricity and gas markets, has been ensuring that households are transferred to a new supplier when their current source collapses.
This is most likely to be with one of the “big six” energy suppliers in the UK – British Gas, Eon, EDF Energy, Scottish Power, SSE or npower.
However, the new provider will be chosen for each household without their say and could result in them being on a higher tariff.
Current Bulb customers are being advised that they should “do nothing” at this stage and that their energy supply will continue.
Martin Lewis, the founder of Money Saving Expert, shared via Twitter: “In reality, for now, it’s no change for customers.”
He echoes the advice that consumers should not stop their payments as Bulb will continue as their energy provider for the time being.
Further, he said customers should not be worried if they are unable to access their online account, reminding them that there will be an increased pressure on the Bulb website following the administration announcement.
In response to the news, Citizens Advice Scotland Fair Markets spokeswoman, Kate Morrison, said: “Bulb is the largest energy supplier to exit the market as the energy price crisis continues.
“We know that a lot of households are likely to be worried about what this means for them. Our advice to consumers is clear – sit tight.
“The regulator Ofgem and the UK Government have a robust safety net in place that will ensure you still have access to energy, and households won’t lose any credit that was on their account.
“People struggling with high energy bills can also contact the Citizens Advice network for help to maximise their incomes. Last year we unlocked £147million for people and our advice is free, impartial and confidential.”
‘Do nothing at this stage’
Citizens Advice recommends that individuals contact their new supplier to make sure the best deal has been selected.
Those who are changing suppliers should also take meter readings, a note of their account balance and keep any past bills.
People are advised that any money they have in credit with their current supplier will be protected.
Conor Forbes, head of policy with Advice Direct Scotland, added: “A major supplier like Bulb announcing that it will be entering special administration will inevitably cause fresh concern about the future of the UK’s energy suppliers.
“But the key advice to all customers is to do nothing at this stage.
“When any energy firm collapses, there is no loss of energy supply and customers do not lose any money owed to them.
“Anyone in Scotland with questions or concerns can contact energyadvice.scot for free, impartial and practical advice by visiting www.energyadvice.scot or calling 0808 196 8660.”