Millions of taxpayers cash to keep Bulb going

itswinter

I think we're all agreed that there was never any real possibility of people being cut off without the government resolving it. To suggest otherwise is a little absurd.

Part of the interesting thing about the demise of bulb is that, if i understood correctly, they provided only variable tariffs (correct me if i'm wrong!). So, no cheap fixes that they couldn't sustain as gas prices went up. Presumably, all their tariffs have already gone up to meet the ofgem price cap?

So, from a government perspective its simpler to keep bulb going with its existing customers and systems, than it is to (presumably pay) suppliers of last resort to take the customers over on effectively the same tariff they're already paying.

QrizB

itswinter said:

So, from a government perspective its simpler to keep bulb going with its existing customers and systems, than it is to (presumably pay) suppliers of last resort to take the customers over on effectively the same tariff they're already paying.

Yes, exactly that.

t0rt0ise

emmajones1976 said:

[Deleted User] said:

Quote:

There were only six electricity disconnections for debt and, for the first time since we started recording data on disconnections, in 2018 there were no gas disconnections for debt. This is again a considerable decrease compared to 2017 when 17 customers were disconnected for debt. There have been no disconnections for debt for gas and electricity in either Scotland or Wales. All six disconnections for debt occurred in England. We are very pleased to see this reduction in gas disconnections for debt from a peak of 5,727 disconnections in 2007. Unquote

Source: Ofgem

No one is going to authorise SoLRs or Administrators to turn off a supply when the sole aim of the SoLR/Administration process is to keep the lights on after a supplier failure. Suppliers now elect for pre-payment meters when there are unresolved debt issues.

No no no 1.7m people risked being cut off apparently!

Emma, reading for understanding not your forte then. Never mind.

Rich2808

Gerry1 said:

Rich2808 said:

That is why they have stepped in - because the free market has failed!

IIRC Bulb went bust not because the free market failed but because Ofgem forced them to trade at a loss by capping their standard variable tariff, the only tariff that they offered.

Weren't all these suppliers aware of the rules and regulations when they entered the market?

Plenty of other suppliers haven't collapsed.

Rich2808

itswinter said:

I think we're all agreed that there was never any real possibility of people being cut off without the government resolving it. To suggest otherwise is a little absurd.

Part of the interesting thing about the demise of bulb is that, if i understood correctly, they provided only variable tariffs (correct me if i'm wrong!). So, no cheap fixes that they couldn't sustain as gas prices went up. Presumably, all their tariffs have already gone up to meet the ofgem price cap?

So, from a government perspective its simpler to keep bulb going with its existing customers and systems, than it is to (presumably pay) suppliers of last resort to take the customers over on effectively the same tariff they're already paying.

Agreed - so can we move on from this academic debate!

The Government would never let any one to be cut off - end of discussion - which is why they would step in as the funder/banker/supplier of last resort! Effectively Bulb is now a government owned and bankrolled entity - in all but name/formal legal terms. 

t0rt0ise

Rich2808 said:

Gerry1 said:

Rich2808 said:

That is why they have stepped in - because the free market has failed!

IIRC Bulb went bust not because the free market failed but because Ofgem forced them to trade at a loss by capping their standard variable tariff, the only tariff that they offered.

Weren't all these suppliers aware of the rules and regulations when they entered the market?

Plenty of other suppliers haven't collapsed.

22 have though.

itswinter

Rich2808 said:

Gerry1 said:

Rich2808 said:

That is why they have stepped in - because the free market has failed!

IIRC Bulb went bust not because the free market failed but because Ofgem forced them to trade at a loss by capping their standard variable tariff, the only tariff that they offered.

Weren't all these suppliers aware of the rules and regulations when they entered the market?

Plenty of other suppliers haven't collapsed.

If the true cost of selling energy to a customer is more than that which can be charged by the company, then they will be losing money. Sustain that situation long enough, and any supplier would go bust. i think the only difference is that some suppliers stave it off longer than others through having larger cash reserves or having insurance policies against such events, but i don't think it's a situation that even the best run supplier could weather indefinitely.

mrochester

It’s almost like we should just nationalise gas and electricity supplies since competition is effectively just an illusion. 

EssexHebridean

Rich2808 said:

Weren't all these suppliers aware of the rules and regulations when they entered the market?

Plenty of other suppliers haven't collapsed.

I'd suggest that yes, they were, but realistically nobody ever thought that there was a significant likelihood of this current situation occurring. Also in some  (many?) cases suppliers (for want of a better word to use for them) came into  being before the days of the price cap, so their assumption may well  have been that if wholesale prices increased, they would simply increase their retail price accordingly - something which they now cannot do, of course.

Energyinsider

Looks like only the large suppliers with huge cash reserves or backing will survive. So the suppliers we’ll be left with aren’t the best ones. Just the best funded.

These companies will be losing nearly a £1,000 per customer, and when you have a million customers that’s a huge amount to lose. Especially when the average industry profit margin has been negative the last couple of years