Every household in Britain faces paying £120 for the costs of energy supplier failures after the collapse of Bulb took the likely bill to more than £3 billion, according to new analysis.
Martin Young, an analyst at Investec, warned that the costs could push some households into “fuel poverty”, as it comes on top of bill increases driven by high wholesale energy prices.
Since the start of August, 23 household energy suppliers with a combined 3.7 million customers have collapsed. Of these, 22 are being dealt with by Ofgem’s “supplier of last resort” process, in which customers are transferred to solvent businesses that can claim any extra costs they face through an industry-wide levy on all households. Young said that the costs of buying energy for these customers at short notice, over and above what they could be charged under the energy price cap, would come to £1.3 billion.
Bulb, with 1.6 million households, has been placed into special administration, with the government lending administrators £1.7 billion to cover short-term running costs.
Young said that “trying to pinpoint the cost that will fall to the industry level, or, in the case of Bulb, arise from the special administration process is akin to attempting to nail jelly to a wall”. His best estimate was £3.2 billion once failed suppliers’ unpaid bills for green schemes were included.
Young said the costs came in addition to “upwards pressure from commodity costs, which will further eat into disposable incomes, with knock-on implications for the broader economy”.
He said: “There are clearly questions for those responsible for market oversight and we are no doubt that there should be an inquiry in the new year.”