Bulb Energy Collapses: What Now?
After weeks of battling the ongoing energy crisis, Bulb Energy has collapsed. If you are a customer, read on to find out what this means for you and your energy.
Bulb Energy has become the latest energy company to suffer collapse from the UK’s current energy crisis. The six year old start-up has now been put into a ‘special administration’ that marks a significant development in the crisis.
Naturally customers will be anxious to know what is next for their energy, so here we explain exactly what’s been going on.
"We’ve made the difficult decision to support Bulb being placed into special administration. This process is designed to protect Bulb members, ensuring there’s no change to your supply and your credit balance is protected."
Who Is Bulb Energy?
Bulb Energy was founded in 2015 by Hayden Wood and Amit Gudka. By 2018, Bulb Energy had become the fastest growing renewable energy provider in the UK, offering 100% carbon neutral gas.
Bulb was regarded as one of the main challenger companies to compete against the Big Six, and was a major player among the surge in small suppliers in 2017. By 2021, Bulb Energy grew to 1.7 million customers, holding just over a 5.5% share of the UK energy market.
Bulb is unique since it only offers one tariff to its customers: the Bulb Vari-Fair tariff. This is a variable tariff which means that the prices you pay will fluctuate with the wholesale market, but even this being the case, Bulb offered some of the cheapest prices. Since this is a variable tariff, there is no exit-fee.
Bulb Energy is a subsidiary of Simple Energy Ltd.
Why Has Bulb Collapsed?
Bulb Energy’s collapse has been due to the rising gas prices in the wholesale market. This rise has put pressure on energy suppliers and as a consequence many have gone bust in the UK in 2021. Factors that have contributed to the the energy crisis have been:
- Gas shortages in Europe and the UK due to low reserves
- Issues regarding the Nord Stream 2 pipelines and European Regulators
- Increased demand for natural gas in Asia
Bulb Energy, despite being one of the larger energy companies, has always operated at a financial loss which means when the crisis started, it began having financial difficulties. In September 2021, Bulb Energy sought new funding with the financial advisory firm Lazard.
What’s Significant About Bulb’s Collapse?
Bulb’s Energy’s collapse is significant for the UK’s energy market since it’s the first energy company to be put into a “special administration regime” (or SAR). This means that Bulb Energy’s is now run by a special administrator.
What About Supplier Of Last Resort (SOLR)?
Many customers will probably have heard of the Supplier Of Last Resort process (SOLR). This means that, under normal circumstances, when an energy company goes bust, the energy regulator Ofgem appoints another energy supplier to take on the customers who are affected.
The SOLR solution prevents any disruption in customers’ energy supplies and ensures a stable market to continue as normal. However with the collapse of twenty-four suppliers this year, the SOLR solution has become saturated.
What Is The Special Administration Regime (SAR)?
When an energy company has such a large customer base that they cannot be taken on by a single SOLR, the Special Administration Regime (SAR) is the next step.
An energy company will notify Ofgem that they have taken the decision to go into a special administration and Ofgem makes an application for an Energy Supply Company Administration Order.
After this is approved by the Court and assent has been given by the Secretary for Business, Energy and Industrial Strategy, the failed energy company is now run by a public administration.
Under a SAR, the Treasury can make loans and give grants to the failed energy company to ensure it operates normally until it is rescued, sold, or its customer base transferred to another company.
Is this the same as nationalisation? A SAR is not the same as nationalisation. The energy company in a SAR is only managed by a special public administrator and is not owned by the state.
I’m A Bulb Customer. What Do I Do Now?
Now that Bulb Energy has gone into a ‘special administration’, this means that the company will continue to operate as normal. The only difference is that it is now run by a special public administrator.
What About My Energy Supply?
Your energy supply will continue to work as normal. You will not have to worry about your energy being cut off and being left without electricity and gas.
What Happens To My Bill?
You will continue to pay Bulb Energy as you usually do. Bulb Energy has stated that there will be no changes to your tariff and your prices are still protected by the price cap. If you pay by top up, this will also continue as normal.
Can I Still Switch?
Although it is recommended that you wait further information from Bulb, you will not experience any problems switching. If you are currently in the process of switching to or from Bulb, this will be unaffected.