Octopus Energy, the UK’s largest electricity supplier, has completed a payment of over £3 billion to the government to acquire failed energy supplier Bulb.
Today’s announcement of the conclusion of the Bulb bailout deal will see the UK government receive £1.5 billion in profit from the saga, finally concluding what has been termed “the bailout chapter”.
Bulb collapsed in November 2021, one of several of energy suppliers who went bust following skyrocketing energy prices in 2021. The company, who represented 1.7 million customers or around 6% of the UK market, entered special administration in November 2021; later that week, the UK government set aside £1.7 billion to support the firm’s administrators until a suitable buyer could be found.
The following year, several major energy companies began bidding for Bulb, including Centrica, OVO Energy, and the eventual winner, Octopus Energy. A wholesale agreement was put in place to cover the costs of migrating Bulb customers, with Octopus also agreeing to a profit-sharing arrangement.
While a judicial review temporarily delayed the transfer of customers to Octopus Energy, the High Court approved the transfer in December 2022, and the acquisition was formally completed later that month.
However, several energy majors, including Centrica, Scottish Power and E.On, launched another judicial review, claiming that the sale to Octopus was “secretive, discriminatory, and uncompetitive”. Following a three day High Court review in early 2023, the High Court unequivocally found that the Government received a fair price for the acquisition. Octopus Energy founder and CEO Greg Jackson later slammed the firms who requested the review, stating that the action “smacked of desperation”.
Octopus Energy agreed to pay almost £3 billion to the UK government for Bulb, and the final payment of this was completed on 30 September. Final transfer of all customers was completed in July 2023.
As part of the transfer, every Bulb employee was offered a job at Octopus Energy, with 94% of former Bulb employees choosing to take this offer.
The UK government has made significant profit from this deal, securing £1.28 billion in profit from the wholesale arrangement, as well as a further £19 million from the profit-sharing mechanism and £200 million in interest. The government is also expected to receive another £20 million from the profit-share agreement in due course.
Greg Jackson, founder of Octopus Energy, commented: “This outcome is a remarkable success story for taxpayers and billpayers. I’m proud that when other companies walked away or banged their fists on the table, Octopus worked hard to find a fair deal which saved the Treasury billions compared to alternatives. I hope this is a model for future deals between government and companies.”
