Two energy providers have offered rival plans to bail out Bulb’s government – .

0
12
Two energy providers have offered rival plans to bail out Bulb’s government – .


At least two energy providers have presented plans that would have allowed customers of the collapsed Bulb group to be shifted to alternative suppliers at lower cost to consumers and taxpayers, according to people familiar with the plans.

Bulb was bailed out by UK taxpayers to the tune of £ 1.7bn after Britain’s seventh-largest energy supplier admitted on Monday it would no longer be able to withstand high wholesale gas prices and of electricity which triggered the worst crisis in the sector for 20 years.

The failed energy supplier, which was founded by former Bain management consultant Hayden Wood and former Barclays trader Amit Gudka in 2015, represents the biggest taxpayer bailout since the Royal Bank bailout of Scotland HBOS in 2008.

Senior industry executives told the Financial Times that several vendors had approached regulator Ofgem with plans that would have allowed Bulb customers to be treated through the usual safety net for bankrupt energy companies rather than one. “Special administration”.

Bulb was placed under special administration on Wednesday, marking the first time the mechanism, in effect a quasi-nationalization, has been used for an energy company.

As part of Ofgem’s normal safety net, known as the “provider of last resort”, customers are quickly transferred to an alternative provider to ensure the least disruption. It is used for the other 24 energy providers that have collapsed since early August as high wholesale prices have exposed deep vulnerabilities in the business models and hedging strategies of many suppliers.

Treating Bulb’s 1.6 million customers through this route would have cost considerably less than special administration, according to several people familiar with the process.

A senior industry executive told the FT that it was a “fundamental lie” that it was “impossible” for another supplier to go after Bulb’s customers.

British Business Secretary Kwasi Kwarteng told the House of Commons on Wednesday that Ofgem had informed him that using the provider of last resort mechanism was “not sustainable.” . . because of the size of its customer base ”.

Ofgem declined to comment directly on competing plans, insisting that “consumer protection is always our top priority and we have robust systems in place to ensure all possible avenues are explored.”

“As the taxpayer might expect, this was a thorough process and the ‘supplier of last resort’ option was considered but was not feasible,” added the energy regulator.

In a letter to Kwarteng justifying the decision to pursue special administration for Bulb, released on Wednesday, Ofgem chief executive Jonathan Brearley said the provider of the mechanism of last resort was already “strained” by management. the bankruptcy of more than 20 other energy companies. These last months.

Brearley also warned that some customers who pay for their electricity through prepayment meters, which often belong to low-income households, risk losing the “ability to recharge” their meter through a supplier-of-last-resort process.

However, Brearley also admitted that Ofgem was trying to avoid additional costs being added to consumers’ energy bills next year.

Energy suppliers who save customers through the supplier of last resort can recover their costs through a sector tax financed by invoices.

Martin Young, analyst at Investec, estimated that the cost of rescuing the two million and more customers who have gone through the mechanism since early August would add at least £ 75 to every dual-fuel household energy bill.

In a special administration, cost recovery “could be spread over several years,” Brearley said in the letter.

Additional reporting by Michael O’Dwyer in London

LEAVE A REPLY

Please enter your comment!
Please enter your name here