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Octopus Energy has sealed its deal to buy Bulb, a collapsed energy rival that has been funded by billions of pounds in government support for nearly a year.

Octopus said it is taking on Bulb’s 1.5 million customers “bringing an end to taxpayer losses and uncertainty for Bulb customers and employees”.

It added: “Octopus is paying the government to take on Bulb’s customer base – it is believed that this will represent a higher amount per customer than suppliers typically paid to take on any of the 29 suppliers who have failed since September 2021.

“Taxpayers will also benefit from a profit share agreement for a period of up to four years.”

The Department for Business, Energy & Industrial Strategy (BEIS) confirmed an agreement had been reached between special administrators of Bulb and Octopus, saying the deal will “protect consumers and taxpayers” and “provides a stable new home for Bulb’s customers and 650 employees”.

Octopus said it is paying the government “above market value” to take on Bulb’s customers.

BEIS said the sale will be completed after a statutory process called an energy transfer scheme, which will move Bulb’s relevant assets into a new separate entity that will “protect consumers during the transfer process”.

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It is expected to take effect by the end of November.

No disruption for Bulb customers

The government will provide financial support to the new entity to purchase energy for Bulb customers over the winter but these costs will later be repaid, Octopus said.

A profit-share agreement will be put in place for the ringfenced business until agreed funding is repaid by Octopus.

This means payments to shareholders or the wider Octopus Energy Group from the ringfenced entity would be restricted until the Government is repaid, Octopus said.

Bulb customers will not experience any disruption to their energy supplies as part of the transfer, BEIS said.

It added there is no change to either firm’s customers’ supply arrangements, and credit balances are protected.

https://bulb.co.uk/press/
Bulb Energy Press kit Picture

It comes after Ovo Energy launched an 11th-hour bid to prevent Octopus from swallowing the nationalised supplier.

Ovo submitted an offer for Bulb soon after it collapsed into insolvency a year ago but subsequently pulled out of the auction.

Taxpayers’ rescue of Bulb is set to cost the government up to £4bn, Sky News revealed earlier.

A significant supply failure

Bulb’s collapse in November 2021 was the most significant among dozens of supplier failures, with Ofgem, the industry regulator, facing heavy criticism for its approach to licensing new entrants to the market.

The government has already been forced to spend billions of pounds buying gas to supply Bulb customers because the company did not hedge its purchases in order to fix its cost base.

Wholesale gas prices have soared over the last year, with Vladimir Putin’s invasion of Ukraine having a particularly pronounced impact on global energy markets.

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That would allow the buyer to secure sufficient forward supplies of gas to steer the company through the winter months.

Octopus intends to repay the government funding over a period lasting a number of months, according to sources close to the situation.

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BP raises prospect of more job losses as AI drives efficiency

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BP raises prospect of more job losses as AI drives efficiency

BP has signalled an accelerated effort to bring down costs ahead, refusing to rule out further job losses as artificial intelligence (AI) technology helps drive efficiencies.

The company, which revealed in January that it was to axe almost 8,000 workers and contractors globally as part of a cost-cutting plan, said alongside its second quarter results that it was to review its portfolio of businesses and examine its cost base again.

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BP is under pressure to grow profitability and investor value through a shareholder-driven refocus on oil and gas revenues.

Just 24 hours earlier, the company revealed progress through its largest oil and gas discovery, off Brazil’s east coast, this century.

BP said it was exploring the creation of production facilities at the site.

It has made nine other exploration discoveries this year.

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BP’s share price has lagged those of rivals for many years – a trend that investors have blamed on the now-abandoned shift to renewable energy that began under former boss Bernard Looney.

BP interim CEO Murray Auchincloss, takes part in a panel during the ADIPEC, Oil and Energy exhibition and conference in Abu Dhabi, United Arab Emirates, Monday Oct. 2, 2023. (AP Photo/Kamran Jebreili)
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BP boss Murray Auchincloss is facing shareholder pressure to grow profitability

His replacement, Murray Auchincloss, has reportedly come under shareholder pressure to slash costs further, with the Financial Times reporting on Monday that activist investor Elliott was leading that charge based on concerns over high contractor numbers.

Mr Auchincloss said on Tuesday that AI was playing a leading role in bolstering efficiency across the business.

In an interview with Sky’s US partner CNBC, he said: “We need to keep driving safely to be the very best in the sector we can be, and that’s why we’re focused on another review to try to drive us towards best in class… inside the sector, and technology plays a huge part in that.

“Just technology is moving so fast, we see tremendous opportunity in that space. So it’s good for all seasons to drive cost discipline and capital discipline into the business. And that’s what we’re focused on.”

When contacted by Sky News, a BP spokesperson suggested the company had no plans for further job losses this year and could not speculate beyond that ahead of the conclusions of the new cost review.

BP reported a second quarter underlying replacement cost profit of $2.4bn, down 14% on the same period last year but well ahead of analyst forecasts of $1.8bn. Much of the reduction was down to lower comparable oil and gas prices.

It moved to reward investors with a 4% dividend increase and maintained the pace of its share buyback programme at $750m for the quarter.

BP said it was making progress in driving shareholder value through both its operational return to oil and gas investment and cost reductions, which stood at $1.7bn over the six months.

Shares, up 3% over the year to date ahead of Tuesday’s open, were trading 2% higher in early dealing.

Derren Nathan, head of equity research at Hargreaves Lansdown, said of the company’s figures: “Production increases, strong results from trading activities, favourable tax rates, and better volumes and margins downstream all played their part.

“It’s also upping the ante when it comes to exploration and development, culminating in this week’s announcement of an oil find at the offshore Brazilian prospect Bumerangue.

“Its drilling rig intersected a staggering 500m of hydrocarbons. Taking into account the acreage of the block, it’s given BP the confidence to declare the largest discovery in 25 years.”

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British Land hires lawyers to scrutinise retail rescue deals

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British Land hires lawyers to scrutinise retail rescue deals

British Land, the FTSE 100 commercial property company, has hired lawyers to scrutinise rescue deals for the high street retailers Poundland and River Island.

Sky News has learnt that Hogan Lovells, the City law firm, has been instructed by British Land to seek further information on restructuring plans that the two chains say are necessary for their survival.

British Land owns 20 Poundland stores, 13 of which would see rents compromised under its restructuring plan, while it is River Island’s landlord at 22 shops – seven of which would be affected.

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Retail industry sources said that British Land had already struck deals to re-let some of the affected Poundland sites.

The company, which has a market capitalisation of ? and is one of Britain’s biggest commercial landlords, is understood to have abstained on the River Island restructuring plan vote.

The appointment of Hogan Lovells does not amount to a decision to formally challenge the restructurings, but that remains an option in both cases, according to industry sources.

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Hogan Lovells has been engaged on a string of previous challenges to retailers’ rescue deals on the basis that they unfairly compromised property-owners.

About 20,000 jobs would potentially be put at risk if Poundland and River Island were to collapse altogether.

Both face sanctions hearings in court this month which will determine whether their rescue deals can go ahead.

Even if the proposals are rubber-stamped, about 100 stores in aggregate across the two chains will be permanently closed.

British Land declined to comment.

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Former fund manager Woodford facing ban and £46m fine

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Former fund manager Woodford facing ban and £46m fine

The City watchdog has provisionally banned former star fund manager Neil Woodford and fined him and his former fund company almost £46m.

The Financial Conduct Authority (FCA) said it planned to prevent Mr Woodford from holding senior manager roles and managing funds.

The watchdog also aimed to fine him £5.89m and Woodford Investment Management (WIM) £40m related to its collapse in 2019.

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Mr Woodford’s flagship fund, Woodford Equity Income (WEI), was wound down after investors tried to withdraw cash faster than the fund could pay out, amid concerns over its high exposure to illiquid and unquoted shares.

The FCA determined that Mr Woodford and the fund “made unreasonable and inappropriate investment decisions” between July 2018 and June 2019.

The fund’s sale of liquid assets and acquisition of illiquid ones meant WEI was unable to meet rules in place at the time, whereby investors should have been able to access their funds within four days.

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“WIM and Mr Woodford did not react appropriately as the fund’s value declined, its liquidity worsened and more investors withdrew their money,” the FCA said.

“The FCA has concluded that Mr Woodford held a defective and unreasonably narrow understanding of his responsibilities.”

Steve Smart, its joint executive director of enforcement and market oversight, added: “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund.

“The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously.

“Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”

Both Mr Woodford and WIM have referred the case to the Upper Tribunal for appeal.

He was yet to comment.

Mr Woodford was once considered the star stock picker of his generation.

He launched his own investment business after building up a reputation for delivering stellar returns while at Invesco Perpetual.

At its height in 2017, the Woodford Equity Income Fund had a value of over £10bn, but by the time of its suspension in June 2019, this had sunk to as low as £3.7bn.

While a redress scheme enabled investors to get some cash back, around 300,000 people lost money through the fund’s collapse.

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