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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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.
The UK’s economic slowdown gathered further momentum during the third quarter of the year with growth of just 0.1%, according to an early official estimate that makes horrific reading for the chancellor.
The Office for National Statistics (ONS) reported a surprise contraction for economic output during September of -0.1% – with some of the downwards pressure being applied by the cyber attack disruption to production at Jaguar Land Rover.
The figures for July-September followed on the back of a 0.3% growth performance over the previous three months and the 0.7% expansion achieved between January and March.
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The encouraging start to 2025 was soon followed by the worst of Donald Trump’s trade war salvoes and the implementation of budget measures that placed employers on the hook for £25bn of extra taxes.
Economists have blamed those factors since for pushing up inflation and harming investment and employment.
ONS director of economic statistics, Liz McKeown, said: “Growth slowed further in the third quarter of the year with both services and construction weaker than in the previous period. There was also a further contraction in production.
“Across the quarter as a whole, manufacturing drove the weakness in production. There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry.
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“Services were the main contributor to growth in the latest quarter, with business rental and leasing, live events and retail performing well, partially offset by falls in R&D [research and development] and hair and beauty salons.”
When measured by per head of population- a preferred measure of living standards – zero growth was registered during the third quarter.
The weaker-than-expected figures will add fuel to expectations that the Bank of England can cut interest rates at its December meeting after November’s hold.
The vast majority of financial market participants now expect a reduction to 3.75% from 4% on 18 December.
Data earlier this week showed the UK’s unemployment rate at 5% – up from 4.1% when Labour came to power with a number one priority of growing the economy.
Since then, the government’s handling of the economy has centred on its stewardship of the public finances.
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The chancellor was accused by business groups of harming private sector investment and employment through hikes to minimum wage levels and employer national insurance contributions.
The Bank has backed the assertion that hiring and staff retention has been hit as a result of those extra costs.
There is also evidence that rising employment costs have been passed on to consumers and contributed to the UK’s stubbornly high rate of inflation of 3.8% – a figure that is now expected to ease considerably in the coming months.
Rachel Reeves has blamed other factors – such as Brexit and the US trade war – for weighing on the economy, leaving her facing a similar black hole to the one she says she inherited from the Conservatives.
Her second budget is due on 26 November.
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She said of the latest economic data: “We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people.
“At my budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.”
Shadow chancellor Sir Mel Stride responded: “Today’s ONS figures show the economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.”
The Scottish government and For Women Scotland’s long-running legal battle over the definition of a woman is yet to come to a close.
For Women Scotland (FWS) won the case in April when the country’s highest court ruled “woman” and “sex” in the Equality Act 2010 refers to “a biological woman and biological sex”.
The Scottish government was ordered to pay a portion of the campaign group’s legal costs.
FWS told Sky News the bill of costs for the Supreme Court element of the case was more than £270,000, however various parts have reportedly been disputed by the Scottish government.
That has now been submitted to the court for determination and a decision is awaited.
Pic: PA
The Outer and Inner House element of the case at the Court of Session in Edinburgh was said to be more than £150,000.
Trina Budge, co-director of FWS, said the group is also due an uplift – a small percentage of the final expenses awarded.
Ms Budge claimed Scottish ministers are yet to enter into any negotiations on settlement and a date has been set in January for a hearing before the Auditor of the Court of Session to confirm the amount the government will have to pay.
Ms Budge said: “The delay always suits the paying party but I think it’s quite unusual to decline to enter into any discussions at all.
“It’s highly likely this is a deliberate tactic in the hope of starving us of funds to prevent us continuing our latest case on the lawfulness of housing male prisoners on the female estate.
“However, it should come as no surprise to the government that we have massive support and we will, of course, be continuing regardless of any sharp practices.”
Susan Smith and Marion Calder, co-directors of For Women Scotland, outside the Supreme Court in London in April. Pic: PA
It is understood the bill of costs for the Supreme Court case was lodged by FWS in August, while the expenses linked to the Court of Session action was submitted in September.
Figures revealed by a recent Freedom of Information (FOI) request show the Scottish government has spent at least £374,000 on the case.
Final costs are yet to be confirmed but will be published once complete.
A Scottish government spokesperson said: “There is an established process to be undertaken to agree the final costs for a legal case and these will be calculated and published in due course.”
In August, FWS lodged fresh action at the Court of Session.
The group claimed Holyrood’s guidance on transgender pupils in schools and the Scottish Prison Service’s (SPS) policy on the management of transgender people in custody were both in “clear breach of the law” and “inconsistent” with the Supreme Court judgment.
The following month, the Scottish government issued updated guidance which said schools across the nation must provide separate toilets for boys and girls on the basis of biological sex.
If possible, schools can also provide gender neutral toilets for transgender students.
However, court proceedings continue over transgender prisoners.
Current SPS guidance allows for a transgender woman to be admitted into the female estate if the inmate does not meet the violence against women and girls criteria, and there is no other basis “to suppose” they could pose an “unacceptable risk of harm” to those also housed there.
First Minister John Swinney and Justice Secretary Angela Constance have both dodged questions on the case, citing it would be inappropriate to comment on live court proceedings.
Justice Secretary Angela Constance and First Minister John Swinney. Pic: PA
On Tuesday, Ms Constance was accused by former Scottish Tory leader Douglas Ross of “misleading” Holyrood, saying she could give full answers under contempt of court legislation.
Scottish Tory MSP Tess White, the party’s equalities spokesperson, added she was “spine-chillingly concerned” of a repeat of the Isla Bryson case.
The case of Isla Bryson sparked a public outcry after the double rapist was sent to a women-only prison. Pic: PA
Bryson, a transgender woman born Adam Graham, was initially sent to a women-only prison despite being convicted of raping two women.
The offender was later transferred to the male estate following a public outcry.
Speaking to Sky News, Ms White said: “John Swinney was quick to waste taxpayers’ money fighting a case which confirmed what the vast majority of the public knew beforehand: a woman is an adult human female.”
The MSP for North East Scotland urged the SNP administration to “pay up and finally respect the clear judgment from the Supreme Court”.
A Scottish government spokesperson said: “It is the Scottish government’s long-held position that it is inappropriate for Scottish ministers to comment on live litigation.
“In all cases, we have an obligation to uphold the independence of the judiciary. We do not want the government to ever be seen as interfering in the work of the independent courts.”
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