Home Inverness colorado loans Government allocates £ 1.7bn to support energy supplier Bulb

Government allocates £ 1.7bn to support energy supplier Bulb

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Prime Minister Boris Johnson visited the offices of what was then a growing company in July. (Bulb / PA)

The government set aside nearly £ 1.7bn to allow Bulb to continue supplying energy to its customers as it fell under administration.

In court on Wednesday, the company was placed under special administration, which will allow it to continue operating for the time being.

The £ 1.69 billion loan will be set aside by the government to support the administrator’s work and ensure the lights stay on for Bulb’s 1.6 million customers.

Business secretary Kwasi Kwarteng can free up more money for the business if needed, court documents show.

Without the money, Bulb could not have kept its doors open after mid-December, they show.

As part of what has been described as too big of an alternative to fail the usual Ofgem process, Bulb will be executed normally by the Teneo administrator, until a potential buyer can be found, or until a potential buyer can be found. departure of its customers.

Directors estimate it will cost around £ 2.1bn to keep Bulb trading going until the end of April next year.

By that time, the energy price cap will likely have been raised significantly, which could free up more money for the company.

The company is three times the size of any other energy supplier that has gone bankrupt in recent years. Normally Ofgem simply lets a business fail and moves its customers to a new supplier.

At the High Court in London, Judge Adam Johnson said the “uncertainty” about Bulb “if not resolved, will inevitably have an effect on customers, employees and suppliers.”

He said the administration was designed “to keep the power supply company running for rescue if possible.”

He added that an alternative was to appoint a supplier of last resort, adding: “This is considered impractical here given the size and importance of Bulb as a supplier.”

The judge said the £ 1.7 billion would be “of existential importance to Bulb”.

Bulb chief executive Hayden Wood was at the hearing on Wednesday. He declined to comment.

Earlier today, Kwarteng said a special administrative regime was a temporary arrangement “which provides an ultimate safety net to protect consumers and ensure continued supply.”

He told the Commons, “We don’t want this business to be in this temporary state any longer than absolutely necessary. “

For the Labor Party, shadow business secretary Ed Miliband said: “With so many companies going bankrupt in just two months, something that is not happening anywhere else in the world indicates a systemic failure of regulations. Businesses took risky bets and were allowed to do so and the government and Ofgem significantly deregulated operating conditions in 2016.

“Will the Business Secretary now take responsibility for the obvious regulatory failure and suggest that there needs to be an appropriate external review of market regulation.”

Since the beginning of September, 22 energy suppliers have been down. They were driven out of the market by soaring gas prices.

Because of these prices and the cap on what companies can charge their customers, companies have been forced to sell energy at a lower price than they bought it for.

Some of the larger companies buy their gas far enough in advance to avoid the worst impacts of the price hike.

However, those who have not been subjected to unprecedented pressure.

Labor MP Alex Sobel (Leeds North West) warned in the Commons: “We are coming back to an oligopoly of energy companies increasing their profits while the supplier of last resort socializes the losses.

“What is he going to do to mend the broken energy market? “

Mr. Kwarteng replied, “I don’t agree with his characterization. I don’t think we’re going back to an oligopoly, as he said. I have always maintained that competition is absolutely essential in this market.

“What has happened is that there has been a huge mismatch between the wholesale price and the retail price cap, and the retail price cap is there to protect consumers.”

Liberal Democrat MP Layla Moran (Oxford West and Abingdon) suggested that a “Northern Rock-style energy company look after customers of companies that have gone bankrupt” if the current process does not work.