The energy crisis
When we started exploring fundraising options, we were delighted to receive lots of interest from investors to fund our business plans and future growth. However, the rising energy crisis in the UK and around the world has concerned investors who can’t go ahead while wholesale prices are so high and the price cap—designed to protect customers—currently means suppliers provide energy at a significant loss.
Wholesale prices have skyrocketed and continue to be extremely volatile. The gas supply shortage combined with lower exports from Russia and increased demand means they remain high and unpredictable. Prices have hit close to £4.00 per therm recently, compared with 50p per therm a year ago. We’ve always been big supporters of the idea of a price cap to protect customers, but the current price cap is set at a level around 70p per therm, well below the cost of energy. The news last week about Nord Stream 2 has sent gas prices back up again. Nord Stream 2 is a new gas pipeline from Russia to Europe which must be approved by Germany and the EU. Last week, Germany suspended its approval process, and there’s growing geopolitical pressure to scrap the project. As a result, the industry has seen many suppliers fail over the past few months and many more are expected to do so over the winter.
Special administration
Special administration is designed to protect the customers of a large energy supplier that’s become insolvent. The special administrator is required by the Government under the 2011 Energy Act to continue to supply energy to customers, and will protect customer credit balances. The process to appoint special administrators is not yet complete but we expect them to be appointed shortly.
Our International businesses in France, Spain and Texas are separate businesses from Bulb UK and are not immediately affected by us entering special administration.
