Bulb is in danger of becoming the next independent energy supplier to collapse due to the surge in wholesale prices, according to a report today
Sky News suggested the group might cease trading as soon as next week in what would be the biggest failure so far of the gas and electricity crisis.
Some 13 supplies have folded already, but Bulb is of a different magnitude altogether.
The group is the country’s seventh-largest energy provider with around 1.7mln household customers.
Only a month ago it was reported that government ministers were looking at options for the group with the large suppliers said to be baulking at the prospect of taking on so many new accounts.
Earlier this month, Sky reported Ovo Energy was among the potential suitors looking at a bid for Bulb but today suggested that the number of potential buyers was dwindling.
The report said Bulb has liabilities of about GBP600mln, making rescue difficult.
In the event of a failure, Ofgem’s Supplier of Last Resort (SOLR) system means the regulator starts an auction to find a new supplier to ensure customers can keep the light on and their credit balances remain protected.
Bulb is so large, however, that if it fails a new process called a Special Administration Regime might have to be invoked.
A SAR would see the government guarantee funding while a restructuring or customer base transfer is sorted out.
Bulb was founded in 2015 and has around a 6% share of the market.
Chris O’Shea, the boss of British Gas owner Centrica, recently told a Lords committee that having to take on failed companies’ customers would add GBP100 to the cost of every household’s energy bill.
Since August more than 2mln customers have been switched to larger, more financially secure suppliers.
Another 4mln customers are classed as “vulnerable,” said O’Shea.
The cost of transferring these customers to other suppliers would drive prices higher, on top of the already sharp commodity price increases.
“If we put these costs on bills at a flat rate then that will not achieve a just transition.”
Surging gas prices have been the catalyst for the crisis.
At one point this month wholesale gas prices were 600% above where they started the year due to a combination of low stocks, outages in supplies to Europe and poor wind speeds affecting renewable generation.
Prices have eased recently on talk Russia was prepared to boost supplies to the European market.
Energy companies have called for a reform of the price cap on bills to ease the pressure they are facing and Ofgem today responded to their concerns by announcing a consultation.