Bulb Energy’s collapse could cost taxpayers billions

Now government officials have told the BBC that keeping the firm running could cost taxpayers billions of pounds more than the near £1.7bn that’s already been set aside. 

This money, set aside by the treasury, was designed to be used to purchase the gas it required until the end of the tax year in April 2022. It was hoped the firm would have found a buyer during this period of time. 

At the time, it was thought wholesale gas prices - the main driver of the issues currently being seen in the industry - would have stabilised, making the sale of Bulb more viable. However, while wholesale gas prices were around £2 per unit in November - prices have been consistently higher than that, increasing to as much as £8 last Monday (7 March). 

As such, government officials have conceded the prospect of offloading the business to a private buyer seems remote in this environment. 

Speaking to the BBC, a spokesperson for the Department for Business, Energy and Industrial Strategy said: "The special administrator of Bulb is obligated to keep costs of the administration process as low as possible, and we continue to engage closely with them throughout to ensure maximum value for money for taxpayers."

This news comes ahead of the energy price cap increase, rising from £1,277 to £1,971, which comes into effect in April. And some market researchers believe this could rise again to more than £2,900 in October 2022. 

Energy market researcher Cornwall Insight said Russia’s invasion of Ukraine has catapulted the price of gas and oil upwards. It’s expected wholegas prices will remain high for months, as Russia is the world’s largest exporter of natural gas. 

In addition to this, research from think tank the Energy and Climate Intelligence Unit said the UK could spend £6.3m per day on Russian gas. This is despite the fact that, based on 2021 figures, the UK imports six to seven percent of its gas from Russia - covering about four percent of overall UK gas demand. 

Based on the price of whole gas on 3 March of 200p a therm, the UK would spend £2.3bn on Russian gas a year - if it continues to import that amount of gas from Russia.