Every household in UK to pay almost £250 to cover failed utility firms

Every household in the country will pay almost £250 to cover utility firms that failed

• Billions needed to bail out 31 energy companies going bust is heaped onto bills
• The total cost will be about £7billion and could go higher, an energy expert said 
• Averaged out, the cost works out at £233 per customer
• Bulb, with 1.6million customers, was the biggest of the 31 to fail

Every energy user will end up paying almost £250 to cover the failures of utility bosses who crashed their companies as gas prices soared last year.

Rapidly rising wholesale energy costs are the main reason prices to be paid by typical users this winter will almost double to £3,549 a year.

But the actions of 31 energy company bosses have added to the burden – since the billions needed to bail them out when they went bust is being heaped on to bills.

The total cost will be about £7billion and could go higher, an energy expert said last night.

Every energy user will end up paying almost £250 to cover the failures of utility bosses who crashed their companies as gas prices soared last year

Some of the cost has already been included in bills but it is expected that more is to come. Averaged out, the cost works out at £233 per customer.

MPs last month concluded some bosses filled their pockets while running up debts and not taking steps to protect their firms from volatile wholesale prices.

By not ‘hedging’ against rises, the suppliers saved themselves hundreds of millions of pounds. Much of this was taken out in eye-watering salaries and dividends.

While many lay the blame at their doors, others have criticised Ofgem for not having strict enough rules in place to prohibit poorly-set-up companies from operating in such a vital industry.

Bulb, with 1.6million customers, was the biggest of the 31 to fail when it finally admitted in November it hadn’t hedged properly and was out of cash.

Founders Hayden Wood and Amit Gudka earned £8 million selling shares in Bulb in 2018. Wood was even paid his £250,000- a-year salary for a further six months after Bulb was put into special administration.

Customers of smaller firms that failed were moved to others under the ‘supplier of last resort’ scheme. This could not happen with Bulb as no company could immediately absorb it’s 1.6million customers.

Bulb, with 1.6million customers, was the biggest of the 31 to fail when it finally admitted in November it hadn’t hedged properly and was out of cash

Instead, its operations are being by overseen by the Government. The National Audit Office initially said in June it would cost around £2.7 billion to cover the energy firm failures, excluding Bulb. But an energy source said last night: ‘In total it is going to be about £4 billion for Bulb.

‘It’s still being run badly. Bulb is still not hedging energy costs – and since prices are going up and up, the losses are escalating. So in total that is close to £7billion.’

The final costs for Bulb will not be known until it is sold or comes out of administration.

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