It leaves the Government with limited room for maneuver at a time when ministers are desperate to return Bulb to private hands. Whichever option is chosen, there will be financial pain.
However, the irony of Bulb’s current circumstances, according to industry experts and analysts, is that they are almost identical in nature to the problems that led to the company’s collapse in the first place.
Founded by former management consultant Hayden Wood and former Barclays energy market trader Amit Gudka in 2014, Bulb pitched itself as an environmentally friendly supplier that offered cheaper tariffs than competitors by following the movements of the market
This lack of coverage often meant savings were passed on to customers more quickly when gas prices fell. But when gas prices began to rise last summer, Bulb was left in a deeply vulnerable position.
By November, he had run out of cash. However, despite being given £1.9bn by the Government to keep the company afloat, administrators have remained hamstrung by Treasury rules which prevent any state-owned entity from taking a hedge.
This has forced Bulb to continue buying power at short-term prices at great expense, and has left the company looking much less attractive to potential buyers.
As one industry source puts it: “Hedging needs to be resolved before anyone buys it.
“All energy companies have 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 make the company sellable.”
The source compares 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 it just got worse.”
In a recent report on the energy market crisis, business committee MPs also urged the Treasury to rethink rules banning coverage so that energy companies in special administration could be exempt.
“The special administration regime has been used for the first time to deal with the failure of Bulb Energy, leaving taxpayers exposed to billions of pounds worth of costs,” MPs said.
“The decision not to implement a hedging strategy may have made the sale of Bulb less desirable and significantly increased costs 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 simply saying it is “TBC”.
However, the chosen method is certainly semantics, with taxpayers footing the bill either way. The cost of dealing with failed energy companies is traditionally shared among households through levies on their bills.
The idea will be worrying for ministers as they face demands to reduce the burden on households as the cost of living crisis deepens.
Although Kwasi Kwarteng, the business secretary, was quick to condemn the “irresponsible management” of some power companies that were not prudent last year, it remains unclear whether Bulb’s period of state ownership has been any better.