The energy crisis continues to claim victims in the UK. Bulb, the seventh largest electricity and gas distributor in the country, and one of those that was betting on 100% renewable sources for the supply of electricity, is on the verge of bankruptcy and is negotiating with the Government to take over a loan of 50 million pounds that it has pending to return, according to the Sky News chain. Its fall would put 1.7 million homes without service, the biggest shock to the market so far this year.
So far this year, 18 marketers have already fallen, which has affected more than 2.5 million households. The fall of Bulb would be the biggest blow to the country’s electricity system, as it alone would shut out a figure equivalent to more than half of all the families hit by the other 14 bankruptcies so far. Customers would not be without supply immediately, but would have limited time to switch suppliers, before being forcibly reassigned to a company decided by regulator Ofgem.
The cause of this insolvency is the huge rise in gas prices that has been shaking the whole of Europe for months. Distributors buy gas on wholesale markets and sell it to citizens at prices regulated by the British government. And when gas is more expensive than that regulated price, what distribution companies are doing is losing money in spades, which is leading British distributors to file bankruptcies en masse.
Bulb had endured a little longer because she herself produced much of the electricity that she sold from renewables, which allowed her to cushion part of the losses caused by gas. But the new increase in gas prices in recent weeks, produced in part by the administrative battle between Germany and Russia over the Nord Stream 2 gas pipeline, has accelerated the process.
The problem with this bankruptcy is that the Sequoia Economic Infrastructure Income fund had loaned 50 million pounds to the distributor, and is now asking for its repayment before it can enter bankruptcy. The company negotiates with the British Government aid, given the lack of interest of the large firms in the sector in buying this company.
To date, the regulator’s reaction to the growing crisis has been to announce that it will review more often the regulated price of the electricity tariff to pass on price increases to consumers, a measure that will influence the already high inflation that it is experiencing the United Kingdom.