Is Bulb Energy going bust? Why UK supplier is reportedly in trouble amid rising gas prices - company response

Wholesale gas price hike has caused five UK energy firms to go bust in recent weeks - will the government step in to save Bulb?

As gas prices continue to rise, many energy firms are facing an uncertain future.

A significant surge in wholesale gas costs brought on by a high global demand has come at a time when supply has been reduced.

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It is due to planned maintenance work, including a fifth of the UK's nuclear power stations currently offline, as well as reduced solar and wind energy outage.

While the energy price cap - a limit energy firms can charge its customers each year - has resulted in many companies shouldering the financial strain in the short term.

It comes as the UK prepares for its coldest months of the year with many households likely to use more energy heating their homes and using credit built up over the summer.

Here's a look at which UK energy companies have gone bust, those that appear to be in trouble - and if Bulb Energy is one of the firms looking for help from industry or the government.

Is Bulb Energy going bust?

Reports surfaced over the weekend that one of the UK's largest energy company, Bulb Energy, was seeking financial support just to stay afloat.

Bulb, founded in 2013, positioned itself as the renewable energy supplier in an already crowded market place, which had grown to 70 firms at the start of 2021.

Industry experts say that number could drop to as few as 10 by the end of the year due to the rising wholesale price of gas, which threatens many smaller suppliers.

Yet Bulb, with 1.7 million customers - the UK's sixth biggest energy company, is in trouble as it seeks a bailout to stay afloat ahead of the country's winter months.

In an effort to raise more funds, Bulb execs are in talks with investors while a potential merger with another company within the industry is also on the table, reports the Financial Times.

Gas supply domestic market share by company. (Graphic: Mark Hall / JPIMedia)

Which energy companies have gone bust?

Many energy firms are experiencing mounting pressure brought on by the rise in wholesale gas prices.

Industry group Oil & Gas UK have found that wholesale gas prices are up 250% since January with a 70% rise since August.

The government's energy price cap has relieved consumers of the immediate financial burden, which is being shouldered by the companies.

But not all of the UK's energy suppliers can take on that extra weight, which has resulted in seven companies biting the dust in recent weeks.

Avro Energy and Green Supplier Limited ceased trading on 22 September, Utility Point and People’s Energy went bust on 14 September 2021, a week after PFP Energy and MoneyPlus Energy went, and following HUB Energy on 9 August.

New suppliers have been found for five of the seven firms to have gone bust, with industry regulations ensuring energy supply will continue for affected customers.

Why are gas prices rising?

A combination of factors fronted by a high global demand have seen gas prices soar of late.

Planned maintenance work on electricity plants has meant around 20% of the UK’s nuclear power stations are currently offline.

While a dip in the energy produced from solar and wind sources, due to recent weather, has also played a part in the balance between supply and demand.

Households have been protected from shouldering the immediate cost by the government’s energy price cap - the maximum price customers can be charged.

Though the cap is set to rise by £139 a year, from £1,138 to £1,277 a year, starting from 1 October 2021 and will be reviewed again by Ofgem in six months’ time.

What has Bulb Energy said about reports?

Bulb Energy neither confirmed or denied it was seeking to secure extra funds.

A statement from Bulb and published by the BBC read: "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."

Is the government helping Bulb Energy?

Despite efforts to secure extra funds, Bulb Energy has reportedly not found any takers so far.

As Britain’s sixth largest supplier, with just over 5% of the market share, the government is considering the nationalism of the energy company, according to the i website.

The initial hope from ministers that some of the larger energy suppliers would take on its customers appears to be dashed with none coming forward with the capacity to absorb the troubled firm’s accounts.

It means that the industry regulator Ofgem and the government could step in, using special administration powers, to keep Bulb afloat while new sources of income are explored.

Business secretary Kwasi Kwarteng has said taxpayer money will not be used to bail out struggling energy suppliers, but will offer some support to viable companies.

Mr Kwarteng said: “Loans is a solution we are looking at, but what am I keen to stress is that these won’t be grants these are not simply handouts. Nor should we bail out all the companies or energy suppliers because a number of them have been badly run.

“It is not a good practice to spend tax-payer money on propping up companies that have been badly run.”

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