Bulb’s demise had been falsely proclaimed many times before the supplier to 1.7 million customers eventually entered the special administration regime this week.
I’ve never really understood it but there was a level of animosity against Bulb from other retailers that was never matched in the feelings about other prominent disruptors. From the moment I entered the utilities sector I was told that Bulb had an unsustainable business model, that it could blink out any day. And yet it continued to grow and grow.
To what extent those concerns were justified will at some point be laid bare because Bulb is now to all intents and purposes a nationalised energy supplier.
There is a certain amount of schadenfreude around the government’s reluctant entrance into a market where it has often seemed dismissive about the challenges businesses face.
As Ecotricity founder Dale Vince told Utility Week: “I am really glad that the government are now in the energy market because they made this mess and now they have to live with it.”
Certainly the government will want to make sure its new business interest is squeaky clean in terms of paying all its obligations on time. It may find in this, and many other areas, things aren’t as straightforward as they seemed.
While Teneo has now been drafted in as administrator, it seems likely that Hayden Wood and his management team will remain with the company to guide it through the winter.
Teneo’s main role will be to find an exit from state backing as quickly as possible. The £1.7 billion set aside should be more than enough to get it through the winter but how much of its money will the government ultimately recoup?
It seems highly unlikely that anyone will come in for the company prior to the announcement about the next price cap review in February. There have been several interested parties over the past few months but all shied away from investment. Will Bulb be a more attractive proposition in the Spring?
In terms of industry buyers, the likeliest candidates seem to be Octopus, Ovo and Shell Energy Retail. The former has already taken on the biggest single supplier of last resort process with the absorption of Avro. Adding Bulb would grow Octopus’ customer numbers by c50%. That would be a bold move but Octopus is hardly risk averse and will presumably be under pressure to show new investor Al Gore that his money is being used for growth not just for firefighting.
For Shell, this could be an opportunity to gain significant scale in UK energy retail in one fell swoop but it entirely depends on how further exposed the board wants to be to this market in the short term.
To me, Ovo seems the least likely buyer, although I may end up with egg on my face. It is notable that of all the big suppliers Ovo is the only one not to take on any of the SoLRs that have taken place this year. Coming just two years after it gargantuan takeover of SSE’s retail arm, would a move for Bulb provide more problems than opportunities?
The collapse of Bulb seems to me a watershed moment in the energy retail turmoil of 2021. We should all be wary of thinking a company is too big to fail in the future.