The UK will pay as much as £4.5 billion ($5.5 billion) to help fund the takeover of collapsed energy supplier Bulb by rival Octopus Energy.
(Bloomberg) — The UK will pay as much as £4.5 billion ($5.5 billion) to help fund the takeover of collapsed energy supplier Bulb by rival Octopus Energy.
Octopus officially took over Bulb’s 1.5 million customers late on Tuesday, despite the objections of rival energy providers. The funding facility will help cover various costs including the bill to secure energy for Bulb’s customers through March 2023, according to a document published by the Department for Business, Energy and Industrial Strategy.
“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,” Octopus Chief Executive Officer Greg Jackson said.
The transfer of customers is the latest development in the largest failure yet in the UK’s energy supplier market. Soaring gas and power prices left many retailers unable to secure supplies for their customers at the prices they’d already agreed. In all, more than two dozen British suppliers went out of business last year.
Bulb was by far the biggest, pushing the government to essentially nationalize the company as it tried to find another supplier to take on its customers. To seal the deal, the government offered Octopus funding to cover the enormous cost of buying energy for over a million new customers.
Octopus said the government will be repaid on an agreed payment plan schedule that hasn’t been made public.
Rivals, including Iberdrola’s Scottish Power, EON SE and Centrica Plc’s British Gas have contested the deal in court. One main issue is the funding offered to Octopus to cover energy costs, which Scottish Power’s lawyers referred to as a “dowry” in court documents challenging the deal. The agreement will be subject to a judicial review, with court dates set to take place next year.
Ultimately, consumers end up paying for the costs of collapsed suppliers. The total price of Bulb’s collapse could reach £6.5 billion, the country’s Office for Budget Responsibility said earlier this year.
(Adds detail on repayment in sixth paragraph)
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