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Collapse of supplier Bulb could add more than £150 to energy bills | energy bills

Households could end up paying more than £150 more on their energy bills as a result of the Bulb collapse, as the price of bailing out the failed supplier threatens to top £4billion by next spring.

The cost of bailing out the British company, which has around 1.4 million customers, has escalated due to soaring wholesale gas prices since the Russian invasion of Ukraine.

The Office for Budget Responsibility said in March the bailout would cost £2.2billion over two years. Advisory firm Auxilione predicts Bulb could lose a further £420m in the six months to October, when households use less energy, and £1.6bn in the colder winter months.

Bulb is in special administration overseen by the UK government and run by restructuring firm Teneo. The government has refused to allow it a hedge – where companies buy energy at a fixed price for a period of time – to expose it to rising gas prices.

Bulb was one of 29 suppliers to collapse during the energy crisis, with many hit by sharp price increases coupled with a lack of hedging.

Auxilione director Tony Jordan told the Financial Times the government is “paying a heavy price for the lack of insurance and the costs could rise even higher if gas prices continue to rise”.

Bulb was deemed too big to fail and the government stepped in to take over administration. It has yet to find a buyer, however, as only Octopus, the UK’s fourth largest supplier, is still interested in a deal.

Octopus has offered to take over Bulb’s customers if the government buys gas and electricity upfront at a cost of £1billion, the FT reported. Octopus has also offered terms under which it would share profits from Bulb’s customers with the government should they become profitable. Octopus chief executive Greg Jackson declined to comment on the report.

Wholesale gas prices shot up again on Monday – with the month-up price in the UK up 16% to 535p a year.

Russian state-owned energy company Gazprom said Friday – after financial markets shut down – that it would halt natural gas supplies to Europe through its mainline Nord Stream 1 pipeline for three days at the end of the month.

The unscheduled maintenance of the pipeline under the Baltic Sea will take place from August 31 to September 2.

Industry watchers fear Russia won’t resume supplies to Europe, forcing countries to cut their gas consumption and risking a recession in Germany, which relies on Russian gas imports.

The UK’s energy crisis is expected to deepen this week when regulator Ofgem announces the level of the price cap for the industry to be introduced in October. It is forecast to rise to £3,582 from £1,971.

Dale Vince, the founder of energy company Ecotricity, said Britain’s energy supply system was “broken” and consumers should not be paying the cost of supplier disruptions on their bills.

He told BBC Radio 4’s Today programme: “This problem predates the Ukraine war. We have a system failure in the energy market; The government must intervene. We shouldn’t expect customers to bear the cost of this failure and the Ukraine war.”

Jackson referred to energy supply trading as a “profit-free zone.” He said, “You can’t expect energy customers or even retailers to bear the cost of a war.” Jackson said gas prices are nine to 11 times higher than normal. “When it comes to beer we’re talking about a wholesale price of £25 a pint,” he added.

Vince supported the idea of ​​a deficit fund that energy companies have proposed to the government. Under the plan, energy bills would be frozen and suppliers could access a fund to cover wholesale costs, which would be paid back over 10 to 15 years.