A failed energy supplier, a £6.5 billion bill. What is going on?
Almost half the energy market in the UK has collapsed in the last 2 years. It's a story of deregulation, privatisation and "competition" — all in the name of some chancers making a quick quid. And Bulb, the largest supplier to fail, is the most telling example.
Bulb was set up in 2014 by management consultant and aspiring DJ, Hayden Wood, and ex-Barclays banker and DJ, Amit Gudka. They rode wave of energy market deregulation pushed by the Tory-Lib Dem coalition government and implemented by Ofgem — since described as “negligent” and “unfit for purpose” by the government’s own auditors.
It worked for Bulb for a while.
Wholesale energy prices were low and it could undercut established competitors with short-term contracts. Bulb grew quickly to become one of the UK's biggest energy suppliers with 1.7 million customers and a £350 million valuation. Its staff could clear £4,000 a month in bonuses and CEO Wood made a salary of £250,000.
Then wholesale prices rose. Suppliers which had bought energy on longer-term contracts were protected, but many of these new suppliers were left exposed.
Despite multiple warnings that many of these new, "start-up" energy suppliers were vulnerable to changing market conditions, market regulator Ofgem didn't act. They were gambling with our money while Ofgem looked the other way.
29 energy suppliers, almost half the entire market, failed when prices rose. And we had to pick up the pieces: £94 on every household's energy bill this year.
But the biggest one was still to come.
Late last year, Bulb collapsed and had to be bailed out by the government at a cost of £6.5 billion. That's £230 from every household in Britain: the biggest bail-out since the Royal Bank of Scotland.
Energy suppliers are middlemen. They don't produce anything and gamble on rising and falling energy prices to extract as much money as they possibly can out of us. When it all goes wrong, they don't pay — we do.
5 months after Bulb went into administration, CEO Hayden Wood was still receiving his £250,000 salary. And now? Bulb is being sold off to Octopus, and the government won't disclose the terms of the sale.
The government nationalised a failing energy supplier at the cost of £6.5 billion. Now they're reprivatising it by selling it on to a rival for a fraction of the cost.
Does this sound like a functioning market to you or does it sound like we're being scammed?