Cost of living: Three tips to save money on energy bills
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
A group of MPs warned the Government’s attempt to shield consumers from the impacts of a collapsing energy firm won’t work, and will increase bills. Bulb went bust in November 2021 at a time when other key suppliers succumbed as a result of rising global gas costs. But MPs on the Business, Energy and Industrial Strategy (BEIS) select committee want to ensure the collapse was paid for via general taxation. The Government responded by arguing the bailout costs would be levied on energy companies using a so-called “shortfall mechanism”.
However, the cross-parliamentary group of MPs warned this would not stop the demise of Bulb being felt by billpayers.
Labour MP Darren Jones, chair of the select committee, said: “It is bewildering that, at a time when average household energy prices are still double what they were a year ago, ministers intend to increase bills further.
“This is all the worse given that the Government has added unnecessary costs to the administration of Bulb by preventing it from buying gas ahead of time – ironically in the name of ‘value-for-money’ guidelines'”.
The cross-party group said energy prices have been pushed up needlessly up by the Government’s reluctance to let Bulb’s administrator hedge, which is when companies buy energy at a fixed price for a certain period, gas and electricity costs, leaving them exposed to rising prices.
Tony Jordan, the director of consultancy Auxilione, told the Financial Times in August the Government “was paying a high price for the lack of hedging, and costs could rise even higher if gas prices continue to soar”.
According to some sector executives, Bulb is losing up tp £5million a day as a result of the decision not to hedge forward gas purchases.
As Russia’s war in Ukraine makes gas prices spike, the cost of bailing out Bulb could continue to soar. The company has 1.6 million customers and in March, the Office for Budget Responsibility warned the bailout would amount to a staggering £2.2billion over two years.
But as prices have risen, other forecasts suggested the bailout cost could hit £4billion.
The firm is in a special administration overseen by the Government, although Octopus Energy is reportedly closing in on a takeover of the company. Ministers at the Treasury and the BEIS have reportedly been told the sale of Bulb’s customer base would be the best outcome.
Sky News reported industry sources saying the agreement to sell the company to Octopus could be finalised in weeks. This could help households swerve £150 extra off energy bill as a result of a Government bailout, Auxilione warned.
Octopus reportedly plans to repay around £1billion of Government funding over several months, sources told Sky.
An energy industry expert said: “Under public ownership, Bulb has been unhedged and will have cost the taxpayer billions.
“Fixing its trading in an orderly way will take several months to avoid moving the market and making things even more expensive for everyone.”
Octopus Energy, which is headed by CEO Greg Jackson, is reportedly expected to pay £100million to £200million to take on Bulb’s 1.6million customer base, with Business Secretary Jacob Rees-Mogg and the new Chancellor expected to be asked to sign off the deal in the next three weeks.
A Government spokesman said: “The Special Administrator of Bulb is required by law to keep costs as low as possible. We continue to engage closely with them to ensure maximum value for money for taxpayers.”
Source: Read Full Article
