Bulb energy collapse: Taxpayer on hook for eye-watering £3bn bailout as crisis intensifies | City & Business | Finance
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After Bulb collapsed in November the Treasury agreed a £1.7billion bailout in order to keep the company going after it was decided moving its 1.7 million customers to alternative suppliers would prove too difficult. Meanwhile energy prices have continued to surge with the Russia Ukraine conflict pushing up wholesale costs to record levels. Administrator Teneo, who is currently running Bulb until a buyer can be found, now requires more funds in order to meet energy demands. Sky News reported that one person familiar with the situation said the amount could reach as high as £3billion given current energy prices.
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The Special Administrator of Bulb is obligated to keep costs of the administration process as low as possible, and we continue to engage closely with them throughout to ensure maximum value for money for taxpayers.”
Teneo did not immediately respond when asked for comment.
The greater strain on the taxpayer comes at a time households are already facing rising energy bills with Ofgem’s price cap rising 54 percent in April.
Energy prices ballooned last year as demand surged from economies reopening after the pandemic with supply struggling to keep up.
A period of unusually slow wind speeds also added to the shortage with lower levels of electricity coming from wind power.
Energy had been predicted to begin falling in price in spring however Russia’s status as one of the world’s largest exporters of gas and oil has derailed this.
While the price cape will see a considerable increase in April the rise does not factor in the more recent increases to wholesale costs driven by the conflict.
Because of these the price cap is likely to rise again in October with some estimates putting this as high as £3,000 for a typical user.
Asset manager Lazard, who were appointed to find a buyer for Bulb, have reportedly struggled so far given the high wholesale costs.
Bulb declined to comment further.
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