Special administration

MWT

bagand96 said:

It's not quite that straight forward as energy companies buy their energy in advance (called hedging).  No idea how well Bulb were/are hedged though.

I'm not going to be surprised if it turns out they were not hedging.

That costs money and in theory, with no fixed price tariffs, their need to hedge was greatly reduced as it would not be needed to reduce risk, only as a gamble to improve margin ... or at least that was the case until the cap was set below the wholesale cost...

worrywart_3

Maybe there will be an overhaul
on how we are sold energy maybe rhey Will look at fixes and caps and rework it and hopefully at the same time overhaul who can get a license to be an energy supplier something has to give 

[Deleted User]

The real ‘elephant in the room’ is whether energy consumers will eventually have to pick up the tab for the additional costs of running a nationalised company at a loss. Consultants do not come cheap as we know from ‘Track and Trace’. If Bulb had been SoLRd then the the SoLR would have submitted a claim for these costs.

Secondly, can we expect to see any future supplier failures subsumed into BulbGov.co.uk?

MWT

[Deleted User] said:

Secondly, can we expect to see any future supplier failures subsumed into BulbGov.co.uk?

On that point, I'd expect that Ofgem will still greatly prefer the SoLR process as adding them into Bulb is not going to be a trivial process both technically and legally so it would have to be a very poor last choice, but it remains a possibility of course.

[Deleted User]

worrywart_3 said:

Maybe there will be an overhaul
on how we are sold energy maybe rhey Will look at fixes and caps and rework it and hopefully at the same time overhaul who can get a license to be an energy supplier something has to give 

Any overhaul of regulations such as mandatory hedging; consumer credits held in escrow etc will undoubtedly lead to higher energy prices. We need to be careful that the solution is not worse than the problem. 

MWT

[Deleted User] said:

We need to be careful that the solution is not worse than the problem. 

In general I agree that wishing for more regulation is rarely a good thing, but in this case the lowest energy prices that were on offer were never sustainable even if we had not seen the recent wholesale price rises, and were based on a business model that depended on exporting the risk to the mutualisation process instead of a balanced risk/profit model that would lead to less extremely low prices but a more sustainable/investable business model.

It will be no bad thing in my view if that business model is not possible in the future...

[Deleted User]

MWT said:

[Deleted User] said:

We need to be careful that the solution is not worse than the problem. 

In general I agree that wishing for more regulation is rarely a good thing, but in this case the lowest energy prices that were on offer were never sustainable even if we had not seen the recent wholesale price rises, and were based on a business model that depended on exporting the risk to the mutualisation process instead of a balanced risk/profit model that would lead to less extremely low prices but a more sustainable/investable business model.

It will be no bad thing in my view if that business model is not possible in the future...

To a large degree, I think that recent market events will help sort out the market going forward. However, this site and others could do their bit by not pushing consumers en masse to suppliers that have no industry track record and who are (were) offering unsustainable prices. I also think that it is time that Ofgem banned referral fees and it set up a single approved price comparison website funded by all suppliers.