UK Approves Pact for Octopus to Acquire Bulb Customers

(Bloomberg) --

The UK government has approved an agreement for Octopus Energy Ltd. to acquire failed supplier Bulb Energy Ltd. in a move that will protect consumers and taxpayers, according to a website statement.

Bulb’s special administrators have reached a final agreement that will see Bulb’s 1.5 million customers transferred to Octopus without any disruption to their service, the government statement said. Octopus, which already has more than 3 million customers, will become the UK’s third largest energy supplier after adding Bulb’s households. 

“Today’s announcement draws a line under that uncertainty,” Richard Neudegg, director of regulation at comparison site Uswitch, said in an email.

In a separate emailed statement, Octopus said it was paying more than what other suppliers had typically offered to take on any of the 29 suppliers who have failed during the UK’s energy crisis. Taxpayers will also benefit from a profit sharing agreement for a period of up to four years, Octopus said.

Bulb collapsed in November when wholesale prices spiked above the regulator’s price cap, forcing it to sell energy at a loss. The government stepped in and appointed Teneo Inc. to run the company with taxpayer money until a buyer could be found. The Office for Budget Responsibility had estimated a £2.2 billion cost over two years, with that likely to be recouped through levies on consumer bills.

The government will provide the remaining funding necessary to ensure customers’ supply is protected. 

“The government can recoup these costs at a later date, ensuring that we get the best outcome for Bulb’s customers and the British taxpayer,” according to the statement.

Read More: Octopus Set to Buy UK Energy Supplier Bulb as Soon As This Week

The sale will be completed after a process called an Energy Transfer Scheme, or ETS, which will transfer the relevant assets of Bulb into a new separate entity. The process, subject to approval by the Business and Energy Secretary, will take effect at a time ordered by the High Court, expected by the end of November.

The government will work closely with UK’s energy regulator Ofgem and Bulb’s special administrators to ensure the transfer of customers to Octopus “achieves the best outcome practicable for Bulb customers, taxpayers, and the industry.” 

(adds quote from Uswitch in third paragraph)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.