By Nicholas Earl
The Government has wasted billions of pounds during Bulb Energy’s (Bulb) protracted and pricey stint in administration, driving up costs for consumers, argued the chair of a leading Westminster body.
Darren Jones, chairman of the BEIS Select Committee told City A.M. that Government ministers have “exposed” bill-payers to a “huge amount of additional costs” by refusing to allow Bulb to hedge for its energy needs.
Unlike other suppliers, which buy energy months in advance over long-term strategies, Bulb has been forced to pay costly spot prices amid mass volatility across wholesale markets.
This has caused the cost of Bulb’s de-facto nationalisation to rise to £4bn, with prospective buyer Octopus Energy demanding £1bn hedging support to take on its 1.6m customers.
Jones argued the Government had been trying to put “square pegs in round holes” by failing to reform outdated value-for-money guidelines.
In his view, those rules did not reflect market conditions of record gas prices and wholesale costs, which have seen nearly 30 suppliers collapse since last summer.
He said: “Anybody running an energy company sensibly knows that you’ve got to hedge against forward prices in order to guarantee prices to your customers.”
Bulb was deemed too large to enter the supplier of last resort process, and instead entered a special administration regime, approved by then Business Secretary Kwasi Kwarteng.
Bulb costs should be shifted to taxation
The chair’s comments follow the latest media release from the committee, criticising the Government for swerving recommendations in its report.
This includes it approach to dealing with large energy firms on the brink of collapse.
It called on the Government to ensure that costs associated with the special administration regime of Bulb Energy to be paid for through general taxation.
However, it is now expected the cost will be added to all consumers’ energy bills, which Jones criticised as “less progressive.”
He believed it was counter-productive to “whack another charge which increases people’s energy bills.” while putting the charge onto taxation would ensure people who can afford to foot the bill for Bulb’s fall from grace could afford it.
The committee estimates that under current Government plans, households will face charges of up to £150 per year to swallow the £4bn bill.
Bulb is on the brink of being taken over by Octopus, after rival suppliers including British Gas owner Centrica and Masdar Energy dropped their bids.
It first fell into administration last November, exposed by soaring wholesale costs and its insufficient hedging strategy.
Since then energy bills have climbed to all-time highs following Russia’s invasion of Ukraine, forcing the Government to intervene with historic support packages, estimated at over £100bn.
The post Exclusive: Government has botched Bulb crisis, says Westminster chair appeared first on CityAM.
