The Government needs to act now
Energy companies have struggled in the last few months due to significant increases in the cost of energy which, due to the price cap, they cannot pass on to their customers. This has meant that most of the smaller providers, and now the 7th largest, have been unable to continue trading.
The Government needs to consider setting up a special business loan scheme for small providers or a resetting of the price cap for a limited period or more energy businesses will fail. A special loan scheme would be preferable to leaving things to the last minute and then having to run a business through special administration.
If the Government does not intervene, the energy market will be back to the ‘big six’ providers only and consumers will not have the flexibility that they have enjoyed up until now.
Structural issues that need to be addressed
This morning’s news that the Government has loaned £1.7b to Bulb is a sign that there are structural issues with the energy market. While this is a loan, it is highly unlikely to be repaid in the near term.
If none of the big six energy companies could take on bulb’s customer base on a profitable basis, which is presumably why the special administration route was chosen, then the Government’s price cap, introduced to protect customers, and the desire for choice seem doomed.
Would you like to know more?
If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact or Simon Rothenberg using the details on this page.
For any press queries, please contact David Barzilay.