Octopus completes Bulb acquisition

Octopus Energy has completed its acquisition of Bulb Energy and its 1.5 million customers, despite efforts by rival suppliers to halt the controversial deal.

The transfer comes more than a year after Bulb became the first energy supplier to enter the government’s Special Administration Regime.

The acquisition is being implemented through an Energy Transfer Scheme, whereby Bulb’s assets are being transferred to a new ring-fenced business that is separate from Octopus Energy.

Octopus said customers will remain on Bulb’s systems for “a while” and will continue to be served by the same team.

Bulb has not been hedging for the energy it supplies its customers since it entered the Special Administration Regime in November last year. Given the massive increase in gas and electricity prices in the meantime, the Office for Budget Responsibility recently estimated the cost to taxpayers of Bulb’s failure at £6.5 billion.

Octopus said the new entity will immediately begin hedging, with the aim of becoming fully hedged by the end of March 2023.

Until this happens, the government will provide financial support to the business to buy energy customers over the winter. This financial support will be repaid by the new company in accordance with an agreed schedule.

Octopus said the government will also receive a share of the profits made by the ring-fenced business under a profit-sharing agreement lasting up to four years.

“This starts to bring an end to the huge financial exposures for taxpayers and paves the way for a better and more certain future for Bulb’s staff and customers,” said Octopus Energy chief executive and founder Greg Jackson.

“For now, we’d ask Bulb customers to sit tight – they will still be looked after by the Bulb team. We’ll be in touch with customers as and when their account is ready to move to Octopus’ award-winning systems.”

Octopus was selected in October to take over Bulb following an open competition run by its special administrator Teneo. The company said it is paying the government to acquire Bulb’s customer base at an amount per customer that is thought be higher than the rate paid by Suppliers of Last Resort to take on the customers of the 29 energy retailers that have failed since September 2021.

The Energy Transfer Scheme was approved by the secretary of state for business and energy Grant Shapps on 7 November, with the transfer date initially being set for 15 November.

However, the transfer was delayed by a High Court judge after Scottish Power, British Gas and Eon raised objections that they had not been given sufficient time to consider bids for Bulb, with a British Gas spokesperson suggesting the acquisition by Octopus may be unlawful.

The three companies subsequently sought judicial reviews of deal but the transfer was nevertheless approved by the judge at the end of November to take place on 20 December.

Judge Antony Zacaroli said the judicial review proceedings were for an administrative court to decide and could run separately. Court dates for the reviews have been set for next year.