MPs have called on the government to explain why it has barred administrators to Bulb Energy from hedging its gas and electricity purchases, leaving taxpayers exposed to rising costs as prices soar.
Britain’s seventh-biggest household energy supplier collapsed in November with 1.6 million customers and was placed into a government-backed special administration regime. The administrators, from Teneo, were provided with an initial £1.7 billion taxpayer loan.
The Times revealed in December that the government had opted for Bulb’s administrators to buy the vast majority of its wholesale energy needs at short notice, as little as a day in advance, because of a Treasury policy against hedging.
A spokesman for the business department said the special administrator was “obligated to keep costs of the administration process as low as possible”. He did not comment on the hedging ban.
That decision has left Bulb exposed to wild fluctuations in energy prices. Industry sources say that Bulb is still buying its energy at most a couple of weeks in advance and have estimated that the bill to taxpayers could rise by £1 billion or more.
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In a letter to Kwasi Kwarteng, the business secretary, Darren Jones, chairman of the business, energy industrial strategy select committee, wrote: “We understand that ministers refused to allow the administrators of Bulb to re-hedge prior to the Russian invasion of Ukraine. This has resulted in a much larger cost exposure to the taxpayer.”
Bulb was the biggest of more than two dozen energy suppliers that collapsed last year as prices soared, in part because it had insufficient credit lines to hedge its energy purchases over the longer term, administrators have said. Sources say that it was only purchasing energy a few months in advance.
A spokesman for Teneo declined to comment.
