July 12, 2024


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Britain’s sixth-largest energy provider Bulb seeks bailout as gas prices surge

Energy supplier Bulb has become the latest firm to seek a bailout amid the surge in gas prices (Stock image)  (PA)

Energy supplier Bulb has become the latest firm to seek a bailout amid the surge in gas prices (Stock image) (PA)

The UK’s sixth-largest energy company, Bulb, is seeking a bailout as a surge in wholesale gas prices threatens to cause chaos for the industry.

The energy startup, which provides electricity and gas to some 1.7 million customers, is reportedly working with financial advisory firm Lazard to help secure new sources of funding.

Options currently being explored by the firm include raising funds from investors, a potential joint venture or a merger with another company, according to the Financial Times.

A Bulb spokesperson said: “From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.

“Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.”

It comes after four small energy suppliers announced they would cease trading in recent weeks amid the price surge. There are currently around 70 energy suppliers in the UK, though industry sources warned the BBC this could fall to as few as ten by the end of the year.

Earlier this month, providers PfP Energy and Moneyplus Energy confirmed they would be going out of business – leaving some 100,000 customers looking for a new supplier.

When a supplier fails, energy regulator Ofgem moves customers to another retailer to ensure that supplies continue and they do not lose money. A new supplier is then responsible for taking any credit balances a customer may have from their previous account.

Wholesale prices for gas are up by 250 per cent since January with a 70 per cent rise since August, according to industry group Oil & Gas UK.

Ministers have been engaged in crisis talks with senior industry executives in an attempt to solve the crisis.

Business Secretary Kwasi Kwarteng is due to hold further negotiations with the energy industry and consumer groups on Monday. Mr Kwarteng acknowledged it was a “worrying time for businesses and consumers”, but said he remained confident energy supplies would be maintained.

“Energy security will always be our absolute priority,” he tweeted on Sunday. “The UK benefits from having a diverse range of gas supply sources – both domestic, and from reliable import partners such as Norway.”

The rise in gas prices has been blamed on a number of factors, including a cold winter that left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

Peter McGirr, the CEO of small energy firm Green, which supplies 360,000 people in the UK, said the outlook for winter was “looking bleak” with current events in the market, including continued rising prices and the shortage of gas.

“I feel that without any support mechanism being put in place by Government, it’s unlikely we will see the winter through,” he told BBC Radio 4’s Today programme. “It is not that I have a bad business model or I have a bad business.

“We just don’t have as deep pockets to keep going through this crisis. I think that all suppliers are feeling the pinch of this but some of them just have a lot deeper pockets to try and ride out the storm.”

The news comes amid fresh warnings that shelves in supermarkets could be left empty within days as a result of the price hike, which has also impacted the supply of carbon dioxide (CO2). The gas is essential to the refrigeration and delivery of products such as poultry and the packaging used in salads.

Two large fertiliser plants in Teesside and Cheshire, which produce CO2 as a by-product, have shut as a result of the price surge. Food industry bosses have warned that the problem is a “national security issue” that must be dealt with urgently.

Ranjit Singh Boparan, the owner of Bernard Matthews and 2 Sisters Food Group, said a shortage of both CO2 and workers will affect the supply of turkeys for Christmas.

“There are less than 100 days left until Christmas and Bernard Matthews and my other poultry businesses are working harder than ever before to try and recruit people to maintain food supplies,” he said.

The Independent has contacted the Department for Business, Energy and Industrial Strategy (BEIS) for comment.

Additional reporting by PA

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