Customers’ credit balances will be protected, Bulb said in a statement, urging its subscribers not to worry.
Bulb’s parent company, Simple Energy, will also enter administration but its international businesses in France, Spain and the US will continue trading.
Energy prices have risen dramatically this year due to a number of factors, such as rising demand as the world emerges from the Covid-19 pandemic and an unusually cold winter that left stocks low.
Firms have also complained that the UK’s price cap on energy bills has meant that they have not been able to pass on the price rise to customers, forcing the companies to pick up the cost.
Back in September, Ofgem chief executive Jonathan Brearley warned that he expected “a large number of customers” to be affected by the crisis, which has already led to multiple energy suppliers going out of business before Bulb.
“It's not unusual for suppliers to go out of the market. I think what is different this time is that dramatic change in the costs that those suppliers are facing,” Mr Brearley said.
“We do expect more [suppliers] not to be able to face the circumstances we're in, but it's genuinely hard to say more than that, partly because that means predicting what may happen to the gas price.”
What should I do if my energy supplier goes out of business?
The good news is that you will still have gas and electricity even if your energy supplier goes bust as Ofgem, the UK’s gas and electricity regulator, will move you to a new supplier.
This will usually take a few weeks but your energy supply will not be disrupted during that time.
You then just need to wait for your new supplier to contact you, as they will explain what is happening with your account.
Ofgem says it will decide who your new supplier is, with details announced on its website and social media following a bidding process from suppliers to get the “best possible deal” for customers.
While this process is going on, customers are advised to check their current balance, download any bills (if possible) and take a photo of their meter reading.
Which companies have gone bust so far?
The Bulb outage means that around 3.7 million customers had been affected by the energy crisis, following the likes of Avro Energy and Green Supplier Limited going out of business.
Those firms joined People's Energy, Utility Point, PfP Energy and MoneyPlus Energy in leaving the market this year.
Collectively, those companies accounted for more than 5 per cent of the market, or around 1.5 million customers, a situation now intensified by the loss of Bulb.
Commenting on the collapses, Ofgem director of retail Neil Lawrence said: “I want to reassure customers of Avro Energy and Green Supplier Limited that they do not need to worry.
“Under our safety net we'll make sure your energy supplies continue. If you have credit on your Avro Energy or Green Supplier Limited account this is protected and you will not lose the money that is owed to you.”
Asked about Bulb’s difficulties, prime minister Boris Johnson’s official spokesperson said Ofgem was “carefully” monitoring the impact of high energy prices.
“We’ve put in place the powers and robust processes to ensure customers don’t experience any disruption to energy supply, and that costs are minimised if a supplier does exit the market,” he said.
“As the public would expect, we have looked at the system, given some of the challenges and speculation that’s been reported about the impact it’s having even on large suppliers.”
Additional reporting by PA
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