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Taxpayer left exposed to gas price swings after £1.7bn Bulb rescue

UK taxpayers will remain exposed to future rises in wholesale gas prices and could add hundreds of millions of pounds to the £ 1.7 billion that the government has already promised to support valve energy.

This week, the former group has become the largest company to succumb to the wholesale gas price crisis. Swallow British energy Supplier — and the UK’s largest bailout since the financial crisis more than 10 years ago.

After revealing that the light bulb will enter the “special administration” on Monday, the government will fund working capital to support the company until April next year so that it can continue to supply electricity and gas to 1.6 million customers. Confirmed that it is offering £ 1.7 billion.

A government official said the state “will try to recover some of the money.” “It’s a loan. It’s not paid at once. It’s an envelope that you can withdraw when you need it.”

“If so, it is no exaggeration to say that costs will rise further,” said a person familiar with the matter when wholesale energy prices rise. The government thinks this is unlikely, but allows additional spending in this scenario to reach hundreds of millions of pounds.

Ministers want gas prices to fall. That means taxpayers’ spending will be less than £ 1.7 billion reserved for light bulbs. Theoretically, rivals could take the company out of control, but customers could move in large numbers to other suppliers, reducing taxpayer costs.

Light bulb intervention is one of the biggest remedies since taxpayers intervened to support RBS and HBOS more than 10 years ago, The entire railroad industry was temporarily nationalized In the middle of last year’s railroad crisis.

Since August, more than 20 energy suppliers have failed. The latest Orbit Energy has 65,000 domestic customers and Entice Energy collapsed 6,500 on Thursday. All customers in the other failed groups except the light bulb were transferred to other suppliers.

According to court documents submitted on behalf of Valve’s parent company, the terms of Valve’s special controls face opposition from creditors.

According to the document, Simple Energy, which employs Bulb workers and provides access to IP and software, is a supplier or an asset of the administrator.

However, the Sequoia Economic Infrastructure Income Fund, which lent Bulb about £ 55 million under a Simple-guaranteed loan, could “confuse the process,” the document said.

According to Filing, the fund is “not satisfied” with the proposed condition that Simple Energy “serves Bulb once each company enters control and special control, respectively.”

After disagreements over whether energy groups should prioritize other debt prior to repayment of loans to the fund, Sequoia Unique restructuring advisor For the role.

The fund said Simple Energy “should insist on conditions that would bring out greater value for Sequoia, whether those conditions are commercially reasonable or accepted by the special light bulb manager.” The document is added.

Sequoia’s strategy is “very aggressive” and risks “derailing the entire process,” said one familiar with the issue, adding that the fund’s approach risks serious controversy with the government. rice field.

Sequoia declined to comment. On Monday, it said in a statement that it had worked “openly and constructively” with “all stakeholders.” .. .. “To ensure the best interests of our customers and employees,” he added, but also called for “fair results for all parties,” including shareholders.

Another court document filed by a lawyer on behalf of Teneo’s Special Manager states that the terms of £ 1.7 billion of government funds provided to Valve before Sequoia recovers the money it should pay for some debt. I explained how to prioritize payments.

Preferred debt includes credit balances accumulated by light bulb customers who have paid more energy than they used for direct debits.

Taxpayer left exposed to gas price swings after £1.7bn Bulb rescue Source link Taxpayer left exposed to gas price swings after £1.7bn Bulb rescue

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