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LBC Views: Govt must get a handle on energy amid Bulb collapse
22 November 2021, 16:27 | Updated: 29 November 2021, 13:51
After the collapse of the UK's seventh largest energy company, LBC's consumer law expert Dean Dunham wonders how many more 'will go pop'.
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The energy crisis has deepened today with news of the imminent collapse of Bulb, the UK’s seventh biggest energy firm with over 1.7 million customers. This marks the biggest failure of a supplier since TXU Energy nearly 20 years ago. But unlike TXU Energy, the demise of Bulb hasn’t been caused by a flawed business model, instead it has been killed off by the way the government decided to structure the current energy market with the price cap.
Bulb will now be placed in special administration, a process designed to protect customers when a large energy supplier can no longer trade. In short, the supplier will be propped up with tax payers money until it is either rescued, sold, or has its customers transferred to other suppliers.
The chances of a rescue or sale of Bulb must be extremely slim, with reports that the supplier has racked up circa 1 billion in debts, surely a sign of how badly wrong Government has got the energy sector and an indication of the state of play for the remaining large suppliers.
How many more will go pop?
The Government needs to get a handle on the energy market now and find the right balance between protecting consumers and keeping suppliers in business. It is in no-one’s interest that we go back to an energy market consisting only of six big players.
Customers of Bulb have been told not to worry about their supply or any credit they have with the supplier. This is comforting but what about those who are in the middle of a Warm Home Discount application, will they be pushed to the back of the queue if they are forced to change suppliers following the demise of Bulb? This must be looked at urgently.