Octopus Energy is celebrating migrating a million Bulb customers onto its system in less than three months.
This follows the supplier completing the acquisition of Bulb – which went into Special Administration in November 2021, amid a swathe of supplier collapses as wholesale power prices surged – in December 2022.
Onboarding Bulb’s 1.5 million customers will see Octopus become the second largest energy retailer in the UK, as the company seemingly continues to go from strength to strength.
“We took on Bulb to provide the best service possible to customers who had been left in the lurch for almost a year. We’re so proud to have reached this milestone in record time – it’s yet another example of the speed of transformation that can be achieved by using technology in a smart way,” said Greg Jackson, founder of Octopus Energy.
“Octopus is a tech company at heart, using technology to make energy easier and cheaper for customers – and we’re over the moon to be able to do this for Bulb customers now too.”
New customers are being switched to the supplier using its proprietary technology platform Kraken, which is designed to connect the full energy supply chain, from renewable generation through to customer operations and billing.
Kraken now supports operations in Europe, the USA, Australia, New Zealand and Japan, servicing over 30 million accounts globally.
Special Administration Regime to be ultimately fiscally neutral
The migration milestone follows the Office for Budget Responsibility (OBR) stating in its March Outlook that the government is expect to make £1.2 billion in profit from Octopus’s acquisition of Bulb.
Following its collapse, the Government provided Bulb’s Special Administration Regime administrators with access to a financing facility to cover the operating losses of the company.
After the confirmation of the acquisition of the supplier by October Energy, a second financing facility was put in place to cover Bulb’s obligations under the sale process. This is mainly the costs of purchasing energy on the wholesale market for the additional customers Octopus now supplies, and was set to run till the end of March 2023.
The OBR’s November forecast suggested these facilities would cost a total of £6.5 billion in capital transfers from government: £2 billion for the first facility and £4.5 billion for the second.
However, both have now been revised down, with the first falling to £1.1 billion up to March 2023.
Due predominantly to drops in the wholesale power price, the Government has reduced the allotted sum for the purchase of power under the second facility from £4.5 billion to £2.9 billion.
This represents the upper limit of these payments, leading the OBR to assume an underspend of £1 billion. This will mean payments under this facility would total £1.9 billion, and gross payments to the Special Administrator would sit at £3 billion.
Whilst some further transfers to and from the Special Administrator as expected for the end of the order period, the OBR does not expect these to be material.
It is now possible that the government will recoup its outgoings through the energy bills charged to migrated-Bulb customers by Octopus Energy, as the proceeds will ultimately be returned to government at some point between September 2024 and September 2025.
Octopus has stated that it expects the resultant amount a profit for government of around £1.2 billion, allowing the government to break even on both financing facilities.
Indeed the government has stated that it intends the Bulb Special Administration Regime to ultimately be fiscally neutral, which will involve recouping any remaining shortfall that cannot me recovered through energy bills through a ‘shortfall direction’ under the Energy Act 2011. This would place a levy on the energy supply industry more broadly.