finance news

UK puts £1.7B aside to cover Bulb Energy’s cost of running for winter

UK puts £1.7B aside to cover Bulb Energy’s cost of running for winter
UK puts £1.7B aside to cover Bulb Energy’s cost of running for winter

To cover the winter running costs of the recently collapsed energy supplier, Bulb Energy Ltd., the UK treasury has reportedly put aside approximately £1.7 billion via a special administration, ensuring that the supplier’s customers are not left stranded during the holidays.

After going bankrupt on Monday, Bulb, Britain's seventh-largest energy distributor, became the first energy firm to be selected for a special administration process, under which it can keep providing electricity and gas to its 1.7 million customers over the course of the winter.

While the fate of Bulb's customers is determined, energy regulator, Ofgem, has proposed to the nation’s courts that international advisory enterprise, Teneo, should take over the company's operations. Meanwhile, during the power sector crisis, the administrator is slated to have access to £1.7 billion in public funds to meet the cost of supplying energy to houses.

According to the UK business secretary, Kwasi Kwarteng, the new system is a ‘temporary arrangement’ that offers an all-encompassing safety net to safeguard consumers and ensure sustained supply.

Kwarteng further added that the organization should not be in transitory form for any longer than it must be.

If energy sector sources are to be believed, the administrator, alongside a team of banks, who are expected to be appointed in the forthcoming weeks, would take anywhere between six weeks and six months to resolve the aftermath of the Bulb Energy collapse.

The provision for a special energy provider administrator was initially enacted into law in 2011, although it has never been implemented until now, due in part because prior supplier failures were small enough to pick a new buyer is a relatively short time span.

After a string of more than 20 energy supplier collapses since this September, Bulb is the biggest to go bankrupt so far. The costs of keeping the company running through the winter, borne by the Treasury, could run into several hundred million pounds for the nation’s taxpayers. If some of these expenses are dispersed across the energy market, the administration could result in increased energy rates for all.

Source credit: https://www.theguardian.com/business/2021/nov/24/uk-supplier-bulb-energy-to-run-under-special-administration-through-winter

About the author

Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.