About £1.7 billion has been set aside by the government bulb A chance to continue supplying energy to your customers as soon as they go into administration.
The company is allowed to continue business for a period of time, even if it is incorporated in special administration In court on Wednesday.
The government’s £1.69 billion loan will be set aside to support and keep the administrator’s work Bulb’s 1.6 million customers Light on.
Business Court documents show that Secretary Quasi Quarteng can release more money for the company if needed.
Without the cash, the bulb would not have been able to keep its doors open in mid-December, they show.
A much larger-than-failed alternative to Offgame’s normal process is to run the bulb as normal by admin Teneo until a potential buyer is found, or until his customers leave.
Administrators estimate that it will cost around £2.1 billion to keep the bulb business going through the end of April next year.
By that time, the range of energy prices would have risen significantly, freeing up more money for the business.
The company is three times bigger than any other energy supplier that has failed in recent years. Usually offgame allows a firm to fail and move its customers to a new supplier.
,@BulbUK has agreed to enter into a special administration process.
Customers don’t have to do anything. There will be no change in your energy supply and credit balance is protected.
more information https://t.co/8DQeoJLcUK
— Department for BEIS (@beisgovuk) November 23, 2021
At the High Court in London, Justice Adam Johnson said the “uncertainty” over the bulb “will have an impact on customers, employees and suppliers if left unresolved”.
He said the administration was “designed to keep the energy supply company running so that it can be saved if possible”.
He said one option was to hire a supplier of last resort, adding: “This is considered impractical given the size and importance of the bulb as a supplier”.
The judge said £1.7 billion would be “critical to the bulb’s survival”.
Bulb chief executive Hayden Wood was at the hearing on Wednesday. He declined to comment.
Earlier in the day, Mr Quarteng said a special administration arrangement was a temporary arrangement “that provides an ultimate safety net to protect consumers and ensure continuous supply”.
He told Commons: “We don’t want this company to be in this temporary state, which is absolutely necessary.”
As for Labor, Shadow Business Secretary Ed Miliband said: “With so many companies closing in just two months, nothing is happening anywhere else in the world, it points to a systemic failure of regulation. Firms risk exposure.” Full bets were placed and they were allowed to do so and the government and the offgame largely controlled the terms of operation in 2016.
When energy suppliers exit the market, we have robust processes in place to ensure that your energy supply continues as normal.
The energy price limit also protects the price you pay.
How we work for your safety https://t.co/rM4LEtuPyo
— offgame (@ofgem) November 24, 2021
“Whether the business secretary will now take responsibility for the apparent failure of regulation and does not suggest that appropriate external review of market regulation is warranted.”
Since the beginning of September, 22 energy suppliers have failed. They were driven out of the market by rising gas prices.
As a result of these prices, and a cap on what companies can charge their customers, businesses have been forced to sell energy for less than they bought for it.
Some of the biggest companies buy their gas well in advance to avoid the worst effects of price hikes.
However, those who have not been put under unprecedented pressure.
Labor MP Alex Sobel (Leeds North West) warned in the Commons: “We are going back to an oligopoly of energy companies ramping up their profits while suppliers of last resort are socializing losses.
“What is he going to do to fix the broken energy market?”
Mr Quarteng replied: “I don’t agree with his characterization. I don’t think we’re going back to an oligopoly, as he said. I have always said that competition is very important in this market.
“What has happened is that there has been a huge mismatch between the wholesale price and the retail price cap, and there is a retail price cap to protect the consumers.”
Liberal Democrat MP Laila Moran (Oxford West and Abingdon) suggested “Northern Rock-style energy company take on customers of companies that are not operating in the current process”.