Update on Bulb failure: credit now confirmed to keep business afloat

Update on Bulb failure: credit now confirmed to keep business afloat

Yesterday, we published a blog about Bulb becoming the latest – and the largest – energy supplier to fail, and the potential impact of this on the wider energy market.

Since that blog went live, the Department of Business Energy & Industrial Strategy (BEIS) has announced an administrator for Bulb – and that the Treasury will now provide £1.7 billion of funding to keep the business running for now.

These developments significantly affect how the exit of Bulb from the market is likely to pan out.

Our understanding is that a court will shortly appoint two individuals from administrators Teneo to manage the business, with a £1.7 billion credit facility made available to them from the Treasury. 

Ofgem is understandably keen for Bulb to see out the expensive winter period before the business is either wound up or sold. 

These two possible routes – along with getting permission from Ofgem to auction off batches of customers in a Supplier of Last Resort (SoLR)-style process – are the major options for the administrators next year. Although under administration rules, selling Bulb as a whole must be their top priority.

So how much in Renewables Obligation (RO) charges is Bulb now likely to pay – and what could the cost impact be to energy consumers?

In line with our previous blog, Bulb is still expected to be fully compliant with RO payments for the April 2020 to March 2021 (CP19) period. 

However, putting money aside for its April 2021 to March 2022 (CP20) RO bill – believed to be around £145 million and due for payment in August 2022 – may not be the administrator’s top priority. Much will depend on how Bulb is sold or wound down.

And what about paying the Treasury back its £1.7 billion?

Ofgem will be keen to recover as much as possible from the sale of Bulb. But this may still mean that energy consumers – or the tax payer – end up contributing.

So we will have to wait and see. There won’t be a quick resolution. But we will keep you posted. And of course, if you have concerns or queries about increasing non-commodity charges, do please contact your Client Lead (existing customers) or email us via nBS@npower.com.

Related Content