However, the irony of Bulb’s current circumstances, according to industry insiders and analysts, is that they are almost identical in nature to the problems that caused the company to collapse in the first place. Founded by ex-management consultant Hayden Wood and ex-Barclays energy market trader Amit Gudka in 2014, Bulb has branded itself as an environmentally-friendly supplier that offers cheaper tariffs than rivals while keeping a closer eye on market movements. That lack of hedging often meant it passed savings on to customers more quickly when gas prices fell. But when gas prices began to climb higher last summer, Bulb was left in a deeply vulnerable position. By November, he had run out of cash. But despite being given £1.9bn by the government to keep the company afloat, the trustees have been hamstrung by Treasury rules that prevent any state entity from bailing out. This forced Bulb to continue buying energy at short-term prices at great expense – and made the company look decidedly less attractive to potential buyers. As one industry source says: “The hedge has to be settled before anyone buys it. “Every energy company has bought in advance for this winter except Bulb. “I don’t think the government plans to pay anyone to take it over, so the question is how do they get the company to sell.” The source likened Whitehall’s failure to hedge to Gordon Brown’s infamous decision to sell Britain’s gold reserves at the bottom of the market: “They chose not to hedge at the exact moment when the market took a turn for the worse.” In a recent report on the energy market crisis, business committee MPs also urged the Treasury to review rules banning hedging so that energy companies in special administration could be exempted. “The special administration regime was used for the first time to deal with the failure of Bulb Energy, leaving taxpayers exposed to billions of pounds in costs,” MPs said. “The decision not to implement a hedging strategy may have made the sale of Bulb less desirable and significantly increased the cost to taxpayers.” Meanwhile, the question of how the special Bulb administration will ultimately be paid for – whether through general taxation or household energy bills – remains unanswered, with a Whitehall official saying only that it is “TBC”. The method chosen is arguably semantic, however, with taxpayers footing the bill one way or another. The cost of dealing with failed energy companies has traditionally been passed on to households through levies on their bills. The thought will be chilling for ministers as they face demands to reduce the burden on households as the cost of living crisis escalates. While Kwasi Kwarteng, the Business Minister, was quick to condemn “irresponsible management” at some energy companies that failed to be prudent last year, it remains unclear whether Bulb’s period of state ownership has fared any better.
