How the U.K. Energy Crisis Is Hitting Household Suppliers

The U.K. has one of the most deregulated energy markets, designed to keep prices low and competitive. Customers can buy natural gas and electricity for homes directly from large suppliers or smaller ones who purchase from the wholesale market and sell it on. The system works fine in normal conditions but has been breaking down under pressure from sky-high prices caused by supply disruptions in Europe. Domestic fuel bills look set for large increases in 2022, even with price caps to protect households.

As of mid-January, 25 U.K. domestic energy suppliers had gone out of business since August, forcing about 4 million homes to switch providers. The most significant failure so far was Bulb Energy Ltd. with 1.7 million customers, the country’s seventh-largest supplier. A special administrator was appointed by a judge -- the first of its kind in the energy sector. In this process, the costs of running Bulb will be supported by the Treasury, the first forced nationalization of a British company since the 2008 banking crisis.