Bulb Energy Has Gone Into Administration

[Essan]

Some cycnics may suggest this is why some providers are massively increasing customers Direct Debit payments, without them being based on actual customer usage. Cheaper to borrow from the customer at 0% than the money markets. And if they go bits up, they walk away with the cash and the government / new supplier / all the other customers contribute to paying the lost credit balances of the failed companies customers.

Although in my case, my provider (Shell) currently recommend that I reduce my monthly DD - I won't do so though as it just means I'll have more credit with them when my current fixed tariff ends in April and my costs, undoubedly, go up by a lot!

 

[PG]

Some cycnics may suggest this is why some providers are massively increasing customers Direct Debit payments, without them being based on actual customer usage. Cheaper to borrow from the customer at 0% than the money markets. And if they go bits up, they walk away with the cash and the government / new supplier / all the other customers contribute to paying the lost credit balances of the failed companies customers.

Do consumers have any choice in the amount of their Direct Debit or do we all just have to accept whatever amount we get told?

 

[najaB]

Do consumers have any choice in the amount of their Direct Debit or do we all just have to accept whatever amount we get told?

We certainly used to be able to, but in the current market suppliers may be reluctant to accept lower than their suggested amount.

 

[Baxenden Bank]

Do consumers have any choice in the amount of their Direct Debit or do we all just have to accept whatever amount we get told?

Yes you have choice, but you probably have to argue for it (but I note @Essan's point about Shell suggesting that their payment be reduced). The amount should be fair but fair is not defined. Basically you should be in balance over the 12 month period. A lot depends on when you start paying - if you start with a zero balance in May, you build up a credit balance over the summer months then it declines over the winter months. However, if you start with a zero balance in October, you quickly go into debit over the winter months, then recover over the summer months. The current mentality of suppliers seems to be that you should always have a credit balance.

Always check your personal use, using your unit rates rather than relying on the 'typical customer' quoted by the supplier.

This linked thread goes into more detail.

Quoting myself:

Utility Warehouse tried to screw me over the monthly budget payment where I would have built up a £1,000 credit balance after 12 months. Nice, for them at least!

The 'average bill' quoted in all the publicity (£1,277 per year) is of little use to anyone in the real world (that's the polite version). Anyone, particularly those on a low income who need to avoid sudden large bills, needs to take control and do their own calculations.

Ofgem will refer you to your energy supplier to advise what their default tariff actually is.

There are actually a large number of averages, depending upon energy type, location and payment method.
Energy type:

• Electricity: Single-Rate Metering Arrangement
• Electricity: Multi-Register Metering Arrangement
• Gas
• Dual-fuel

Payment Type

• Other Payment Method (direct debit)
• Standard Credit (pay on receipt of bill)
• Pre-Payment Meter

Regions

• North West
• Northern
• Yorkshire
• Northern Scotland
• Southern
• Southern Scotland
• N Wales and Mersey
• London
• South East
• Eastern
• East Midlands
• Midlands
• Southern Western
• South Wales

There is then a GB average and a GB average including VAT.

NONE of those figures, on the official spreadsheet, say £1,277 per year!

The averages on the official spreadsheet assume:

• Electricity: Single-Rate Metering Arrangement - 3,100 kWh per year
• Electricity: Multi-Register Metering Arrangement - 4,200 kWh per year with a 42% nightime / 58% daytime split
• Gas - 12,000 kWh
• Dual-Fuel is calculated from the Single-Rate Metering and Gas figures

Of course, everyone will have their own usage patterns, so need to do their own sums rather than relying on any quoted average.

MOST IMPORTANTLY - do not trust any estimate given to you by your supplier, check it, dispute it, escalate it, make a formal complaint. Then they will reduce your payment to a more realistic level.

 

[PG]

We certainly used to be able to, but in the current market suppliers may be reluctant to accept lower than their suggested amount.

I used to pay monthly by Standing Order but only recently switched to Direct Card as my supplier (who had sold out to a larger company) said it was no longer accepting payment by Standing Order. Lo and behold I've recently received a standard letter explaining that my Direct Debit is increasing from next month. Massively feels like I'm being used, as @Baxenden Bank suggested, as an interest free loan facility!

 

[Typhoon]

Bulb (or at least their administrators) are getting a government bail out:

Bulb has been handed about £1,000 per customer from the UK government to enable it to continue supplying energy.
The firm was put into special administration on Wednesday, which will allow it keep trading for the moment.
Bulb will be run by administrator Teneo until a buyer can be found or until its customers have moved.
The government loan of nearly £1.7bn will mean the administration is managed in a way that the lights stay on for Bulb's 1.7 million customers.
Teneo estimates it will cost around £2.1bn to keep Bulb trading until the end of April next year.
Business Secretary Kwasi Kwarteng can provide more money for the company if needed.
Without the cash, Bulb would not have been able to keep going past the middle of December, court documents show.

UK government sets aside £1.7bn to support Bulb customers - BBC News

 

[Dai Corner]

If you are on a fixed price tariff the provider is forced to supply energy at that price (even if it is now well below the wholesale price) for the duration of the contract. If you are on a variable rate the price cap applies. In either case it typically means energy suppliers are being forced to sell energy at less than they are buying it for, at the moment.

No. The better-run, more risk-adverse, suppliers will have bought (most of) the energy they expect to supply in the future at pre-agreed prices. Thus they can sell it either at the fixed rates agreed with consumers or at the Government price cap without making a (bankruptcy-triggering) loss.

 

[najaB]

No. The better-run, more risk-adverse, suppliers will have bought (most of) the energy they expect to supply in the future at pre-agreed prices. Thus they can sell it either at the fixed rates agreed with consumers or at the Government price cap without making a (bankruptcy-triggering) loss.

Hedged prices eventually end though.

 

[Dai Corner]

Hedged prices eventually end though.

Oh yes. Future fixed tariffs will reflect suppliers' costs. Hopefully the next Government cap will too, so that suppliers will still be able to manage their risks.

 

[gtis]

I don’t pay by DD I have a bill sent and pay that at the post office very old school
Neil

 

[Baxenden Bank]

Article in The Times today:

Emily Gosden, Energy Editor
Tuesday November 30 2021, 12.01am, The Times

Households face £120 bill for failed energy groups​

Every household in Britain faces paying £120 for the costs of energy supplier failures after the collapse of Bulb took the likely bill to more than £3 billion, according to new analysis.

Martin Young, an analyst at Investec, warned that the costs could push some households into “fuel poverty”, as it comes on top of bill increases driven by high wholesale energy prices.

Since the start of August, 23 household energy suppliers with a combined 3.7 million customers have collapsed. Of these, 22 are being dealt with by Ofgem’s “supplier of last resort” process, in which customers are transferred to solvent businesses that can claim any extra costs they face through an industry-wide levy on all households. Young said that the costs of buying energy for these customers at short notice, over and above what they could be charged under the energy price cap, would come to £1.3 billion.

Bulb, with 1.6 million households, has been placed into special administration, with the government lending administrators £1.7 billion to cover short-term running costs.
Young said that “trying to pinpoint the cost that will fall to the industry level, or, in the case of Bulb, arise from the special administration process is akin to attempting to nail jelly to a wall”. His best estimate was £3.2 billion once failed suppliers’ unpaid bills for green schemes were included.

Young said the costs came in addition to “upwards pressure from commodity costs, which will further eat into disposable incomes, with knock-on implications for the broader economy”.

He said: “There are clearly questions for those responsible for market oversight and we are no doubt that there should be an inquiry in the new year.”

I haven't linked as the article is behind a paywall. Entire text copied across.