Fears grow that energy firm Bulb could collapse next week as government accelerates contingency plans
The government is accelerating contingency plans for the collapse of Bulb, Britain’s seventh-biggest domestic energy supplier – a demise that would mark by far the biggest insolvency of the crisis engulfing the sector.
Sky News has learnt that ministers and officials, along with the industry regulator Ofgem, believe that Bulb – which has around 1.7 million household customers – could collapse as soon as next week, amid diminishing expectations of a rescue deal.
Industry sources said on Friday that talks with a small number of potential buyers were ongoing, but that others had pulled out in recent days.
A solvent rescue remains a possibility, they said, but added that it was highly unlikely that Bulb could survive through November without new funding.
Ovo Energy, Octopus Energy, and Shell Energy Retail are among the rival gas and electricity groups which have had access to Bulb’s financial data in recent weeks.
An executive at one of the companies which had explored a takeover of Bulb said it had liabilities of approximately £600m, making a solvent takeover of the company hard to envisage given the backdrop of wholesale price volatility.
A Bulb spokesperson said on Friday: “Our discussions with multiple parties to secure additional funding continue to make good progress and we’re encouraged by the drop in wholesale energy prices.
“We expect the government to monitor wholesale prices and their effect on the whole industry, but ministers and Ofgem have been clear we must emerge from the energy crisis with a competitive and innovative market, rather than a return to the oligopoly of the past.”
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Lazard, the investment bank, has been engaged in the search for new funding, while AlixPartners, an advisory firm, has been working with Bulb on short-term measures to strengthen its balance sheet.
If Bulb does collapse, it would place at risk the jobs of roughly 1000 people who work for the company, which was launched in 2015 by Amit Gudka and Hayden Wood, and has accumulated a 6% share of the market.
It supplies 100% renewable electricity and 100% carbon-neutral gas, which would make its failure around the time of the crucial COP26 climate summit in Glasgow a more acute headache for the government.
Its demise would also render the shareholdings of executives and their venture capital backers largely worthless.
The latest developments in Bulb’s rescue efforts pave the way for the inaugural use of a resolution process called the Special Administration Regime (SAR), which would guarantee funding for Bulb from the Treasury while administrators seek a restructuring deal, buyer, or transfer of the customer base.
The demise of Bulb would come close to matching the size of the total customer bases of the 14 energy companies which have ceased trading since the beginning of August.
The largest of those, Avro Energy, had about 580,000 customers.
If the search for a buyer does prove unsuccessful, the Department for Business, Energy and Industrial Strategy, alongside Ofgem, would initially consider whether Bulb can be dealt with through the watchdog’s Supplier of Last Resort (SOLR) process.
Under that, a company’s operating licence is removed and bids are sought from other industry players for its customer base, with losses incurred by the acquirers of those customers are then recouped through an industry levy.
Bulb is, however, regarded by most observers as too large for any single supplier to take on through the SOLR system, meaning that invoking the SAR is now viewed as probable by industry executives.
Under the SAR, the administrator has a legal duty to consider the interest of customers, unlike a conventional insolvency process where the primary duty is to creditors.
Sky News revealed last month that Ofgem had lined up Teneo Restructuring, an advisory firm, to be on standby for the collapse of a large energy company.
In a statement on its website about SAR, Ofgem said a memorandum of understanding had been drawn up between itself, the Treasury, and BEIS, adding: “Provisions for this administration scheme for energy suppliers were included in the 2011 Energy Act.
“It has never been used before because a large energy supplier has never been insolvent.”
A government spokesman said on Friday: “Ofgem – as the expert regulator – is monitoring the situation across the energy market for the continued impacts on high worldwide wholesale gas prices.
“We have put in place the powers and robust processes to ensure customers do not experience any disruption to their energy supply and that costs are minimised if a supplier should exit the market.”
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Energy supplier crisis must never happen again – British Gas boss
The regulator added: “There has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers.
“We know this is a worrying time for many people and our number one priority is protecting customers.
“In the event a supplier fails, Ofgem and government have robust processes in place to ensure customers’ electricity and gas supply continue and domestic customers’ credit balances are protected.”
Many of Bulb’s customers could face higher bills because wholesale prices have soared in recent months, although they have begun to fall again.
In total, around 2 million households have seen their supplier cease trading since the summer, sparking demands from some executives for a removal of the industry price cap or a bailout fund to help with the rescue of smaller suppliers.
Kwasi Kwarteng, the business secretary, has rejected both demands.
On Friday, Ofgem said it would consult on changes to the price cap because the ongoing industry crisis had “changed the perception of risk and uncertainty in this market”.
The collapse of one of the biggest challengers to the big players – the largest of which are Centrica’s British Gas, E.ON Next, EDF Energy, Scottish Power and Ovo Energy, which acquired SSE’s retail business – would be a blow to hopes of a more varied and competitive market.
Octopus Energy, which like Bulb supplies 100% renewable energy, has established itself as an independent, well-funded challenger and now boasts 2.5 million customers across more than 4 million accounts.
Gatwick Airport’s South Terminal has been heavily disrupted after a “suspected prohibited item” was discovered in luggage, leaving passengers in limbo.
Some passengers were reportedly left on planes that weren’t taking off, while others were stranded in the airport for hours after Gatwick made the announcement this morning.
Sussex Police said the explosive ordnance disposal team was being sent in “as a precaution” and a security cordon was put in place.
It now says the incident has been resolved and cleared – but warned there were still “some delays and cancellations”.
Gatwick Airport latest updates
The airport, which is the UK’s second busiest, was set to see off some 316 departing flights today, according to aviation analytics website Cirium.
But what are the rights of passengers if their flights are delayed or cancelled?
Your rights during delays
Your flight is covered by UK law if it departs from a UK airport, arrives at a UK airport on a UK or EU airline, or arrives at an EU airport on a UK airline.
When it comes to significant delays, UK law says airlines must provide you with care and assistance.
Significant delays are classed as:
- More than two hours for short-haul flights of under 1,500km (932 miles)
- More than three hours for medium-haul flights of 1,500km-3,500km (932-2,175 miles)
- More than four hours for long-haul flights of over 3,500km
Here’s what the law says the airline must provide you with until it is able to fly you to your destination:
- A reasonable amount of food and drink
- A means for you to communicate (often by refunding the cost of your calls)
- Accommodation, if you are re-routed the next day
- Transport to and from the accommodation (or your home, if you are able to return there)
It says this must be provided for you for however long delays last, irrespective of what has caused them.
Passengers facing delays have been handed blankets by staff at the airport
Airlines may not always be able to arrange care and assistance for all passengers during major disruptions directly, but the UK Civil Aviation Authority (CAA) says you can organise the things listed for yourself and then claim the cost back from your airline later if you keep every receipt and do not spend more than is deemed reasonable.
In other words, don’t splash out on things like alcohol and luxury hotels during your wait and expect to claim your money back later.
What are your rights if your flight is cancelled?
If your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
You can get your money back for all parts of a ticket you haven’t used, the CAA says.
If you have booked a return flight and the outbound leg is cancelled, for example, you can get the full cost of the return ticket back from your airline.
“If you are a transfer passenger and you have already completed part of your journey, you are also entitled to a flight back to your original departure point when your connecting flight is cancelled and you decide not to continue your journey,” it adds.
If you still want to travel, your airline must find you an alternative flight – whether it is the next available one, or a flight at an alternative, later date.
If another airline is flying significantly sooner than yours is able to offer, you may have the right to be booked onto a rival airline’s flight, but this has to be negotiated with the company.
On last-minute cancellations, Naveen Dittakavi, founder and chief executive of Next Vacay, said: “If you’re already at the airport once the flight is cancelled, the best thing you can do is stay calm – you are protected against many things that might go wrong.
“Try calling the airline helpline rather than waiting to speak directly with the airport staff. The helpline is often more flexible and may provide you with an e-credit or voucher, or flexibility to change your travel dates quickly.”
Can you get compensation?
In some cases, airlines may have to provide compensation if your flight arrives at its destination more than three hours late – but that is only if the delay is deemed to be your airline’s fault.
Disruptions caused by things deemed “extraordinary circumstances” are not eligible for compensation, according to the CAA.
Downing Street has indicated Israeli Prime Minister Benjamin Netanyahu would be arrested if he arrived on British soil following an international arrest warrant being issued for him.
On Thursday, the International Criminal Court (ICC) issued arrest warrants for Netanyahu and former Israeli defence secretary Yoav Gallant for alleged war crimes and crimes against humanity related to the war in Gaza.
The UK government was reluctant to commit to saying Netanyahu would be arrested if he came to the UK but Sir Keir Starmer’s spokesman said the government would “fulfil its legal obligations” in relation to the arrest warrant.
“The UK will always comply with its legal obligations as set out by domestic law, and indeed international law,” he said.
He added the domestic process linked to ICC arrest warrants has never been used to date by the UK because the country has never been visited by anyone wanted by the international court.
Earlier on Friday, Home Secretary Yvette Cooper said it “wouldn’t be appropriate for me to comment” on the processes involved as the ICC is independent, although the UK is a member.
She told Sky News: “We’ve always respected the importance of international law, but in the majority of the cases that they pursue, they don’t become part of the British legal process.
“What I can say is that obviously, the UK government’s position remains that we believe the focus should be on getting a ceasefire in Gaza.”
However, Emily Thornberry, Labour chair of the foreign affairs committee in parliament, told Sky News: “If Netanyahu comes to Britain, our obligation under the Rome Convention would be to arrest him under the warrant from the ICC.
“Not really a question of should, we are required to because we are members of the ICC.”
After winning July’s election the government said it would not oppose the ICC’s right to issue the warrants.
Netanyahu and Gallant (right) have arrest warrants against them. File pic: Reuters
Ireland, France and Italy have signalled they would arrest Netanyahu if he came to their countries.
Asked if police would arrest the Israeli leader in Ireland, Irish Taoiseach Simon Harris said: “Yes, absolutely. We support international courts and we apply their warrants.”
Germany said it would make a decision if Netanyahu came to Germany but said it is one of the “biggest supporters of the ICC”, partly as a result of history.
A German government spokesman said: “At the same time, it is a consequence of German history that we share unique relations and a great responsibility with Israel.”
An ICC arrest warrant was also issued for Hamas leader Mohammed Diab Ibrahim al Masri, the mastermind behind the 7 October attacks in Israel, for alleged war crimes and crimes against humanity.
Israel claims Al Masri was killed earlier this year but the ICC said that has not been confirmed, so it was issuing the arrest warrant.
Netanyahu’s office said the warrants against him and Gallant were “antisemitic” and said Israel “rejects with disgust the absurd and false actions”.
Neither Israel nor the US are members of the ICC. Israel has rejected the court’s jurisdiction and denies committing war crimes in Gaza.
Read more:
What satellite images tell us about North Gaza
Hamas ready for Gaza ceasefire ‘immediately’
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Why have arrest warrants been issued?
US President Joe Biden described the warrants against Israeli leaders as “outrageous”, adding: “Whatever the ICC might imply, there is no equivalence – none – between Israel and Hamas.”
Former Israeli prime minister Naftali Bennett said the warrants for Netanyahu and Gallant were a “mark of shame” for the ICC.
The Board of Deputies of British Jews said the ICC’s decision sent a “terrible message”.
Hungarian Prime Minister Viktor Orban said on Friday he would invite Netanyahu to visit Hungary and he would guarantee the arrest warrant would “not be observed”.
The ICC originally said it was seeking arrest warrants for the three men in May for the alleged crimes and on Thursday announced that it had rejected challenges by Israel and issued warrants of arrest.
In its update, the ICC said it found “reasonable grounds to believe” that Netanyahu and Gallant “bear criminal responsibility” for alleged crimes.
These, the court said, include “the war crime of starvation as a method of warfare; and the crimes against humanity of murder, persecution, and other inhumane acts”.
It is the first time a sitting leader of a major Western ally has been accused of war crimes and crimes against humanity by a global court of justice.
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