Octopus Energy promotional toys at the headquarters of Octopus Energy in London (PA)
(Picture: PA Archive)Around 1.5 million customers have a new source of gas and electricity after Octopus Energy completed the acquisition of Bulb, the once fast-growing utility that went bust as wholesale prices soared, wiping out profit margins for firms offering lower tariffs.
The controversial sale puts the company back into private hands after the government stepped in to prevent its collapse. According to a separate government statement, £4.5 billion in public money has been set aside under the terms of the deal to cover “the cost of purchasing wholesale energy for the transferring Bulb customers for a limited period until March 31”.
The deal, approved by Grant Shapps, the business and energy secretary, went through just before midnight. It faced a chorus of criticism from other industry players including E.ON, British Gas and Scottish Power, who called for more time to scrutinise the terms.
There will be a judicial review in the new year of the government decision to make the sale, and Bulb’s assets will be ring fenced within its new owner. Bulb was unable to hedge the cost of its energy supplies while it was in administration and it will begin to do so straight away under new ownership and aims to be fully hedged by the end of March. Wholesale gas prices have risen sixfold in six weeks as a cold snap in the UK left Brits putting the heating back on, at a time when the government’s Energy Price Guarantee scheme caps the annual energy bill of a typical UK household at at £2,500 this year. It will rise to £4,279 from January.
Octopus said the transfer brought “vital reassurance” to customers after “a year of uncertainty”, adding:
“The agreement will save taxpayers millions of pounds as Bulb moves back into private ownership and the government is no longer directly exposed to the volatility of the wholesale energy market.” It also said there would be a profit share arrangement in place with the government.
Greg Jackson, chief executive and founder of Octopus, said: ““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.”
