Wed, Nov 24, 2021 9:54 AM
By PAN PYLAS, Associated Press
LONDON (AP) — Britain's energy regulator said Wednesday that it's looking to appoint an administrator to oversee the latest business casualty in the country's domestic energy market following the demand-led spike in gas prices.
Ofgem said the 1.7 million customers of Bulb, the biggest company to fall victim to the big spike in gas prices this year, won't see any changes as a result of the move. Wholesale gas prices have tripled this year largely because the global economic recovery from the coronavirus pandemics increased demand.
If the application is successful, Bulb will be run as normal by administrator Teneo until a potential buyer can be found, or until its customers leave.
The decision to put Bulb into a form of bankruptcy protection represents a change of tack by the regulator that is likely due to the size of the business. Normally, Ofgem simply lets a firm fail and moves its customers to a new supplier.
Since the beginning of September, 22 energy suppliers have failed in the U.K. as a result of the spike in wholesale gas prices, prompting critics to argue that the Conservative government has been too lax in its regulation of the market.
Business Secretary Kwasi Kwarteng said a special administration regime was a temporary arrangement which provides an “ultimate safety net” that will protect consumers and ensure continued supply.
“We do not want this company to be in this temporary state longer than is absolutely necessary," he said.
Because of the existence of a cap on what companies can charge their customers, many businesses have been forced to sell energy for less than they bought it for.
Some of the biggest companies buy their gas far enough in advance that they have avoided the worst impacts of the price spike. However, many of the new smaller entrants into the market didn't hedge in the same way and have been placed under unprecedented pressure.
Ed Miliband, energy spokesman for Britain's main opposition Labour Party, said the problems afflicting the market are a result of the government's “failure of regulation.”
“Firms took risky bets and were allowed to do so and the government and Ofgem significantly deregulated the conditions of operation in 2016,” he said.