Octopus Energy seals bid to take over 1.5 million Bulb customers
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”.
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.
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.
The British-born newspaper-owner whose takeover of The Daily Telegraph appears to have been thwarted by a £500m deal with RedBird Capital Partners has called on the title’s stakeholders to rally behind his bid instead.
In an opinion piece to be published later on Friday, Dovid Efune, publisher of The New York Sun, will say that his offer is “now within sight of the finish line, with the bulk of the needed funding committed”.
Mr Efune has been assembling a bid for the right-leaning newspapers for months, with a series of funding options having been explored.
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He now has backing from Nadhim Zahawi, the former Conservative Cabinet minister whose interest in the Telegraph was revealed last year by Sky News, and Jeremy Hosking, a prominent and wealthy City investor.
In his opinion piece, Mr Efune described the Telegraph as a “crown jewel”, adding that British journalism was the envy of the world.
“It is no coincidence that a meaningful portion of America’s largest newsrooms are run by British journalists,” he wrote in a piece shared exclusively with Sky News.
“These include the Wall Street Journal, the Washington Post and CNN.
“You might say that journalists, editors and journalism writ large are among Britain’s greatest exports.”
Referring to the Barclay family, which owned the Telegraph for about two decades, Mr Efune said the newspapers had “functioned as something of a piggy bank for its previous owners, and as a useful form of real estate collateral”.
“The Telegraph’s achievements and advancements despite these handicaps are impressive. But it deserves better,” he wrote.
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Mr Efune said the £500m RedBird takeover – which is likely to involve minority ownership stakes for Abu Dhabi state-backed IMI and Lord Rothermere, the Daily Mail proprietor – had “significant hurdles to overcome”.
“Since The Telegraph first came on the market I’ve dedicated much time and resources to finding a solution,” he said.
“Some details of these efforts have become public. Much has not.
“In particular, I’ve sought to recruit the best-suited investor group to step into the fray.
“That means fully aligned partners, committed to the work of unlocking The Telegraph’s significant potential.”
He described the process as “a turbulent undertaking” which had “faced unwelcome interference along the way”.
“Our group is unique in that, firstly, it is distinctly British, with, as of this moment, the leadership and vast majority of funders being British citizens.
“I, for one, was born in Manchester and raised in Brighton.
“My family owes a great debt of gratitude to this country.
“My grandmother was saved by Britain’s grace and welcome at the age of nine, fleeing Nazi Germany on the Kindertransport.”
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Mr Efune said his family had made a significant contribution to the UK, with his grandfather, Peter Kalms, helping to build the electrical goods retailer Dixons into a household name.
“My great uncle Michael was killed as a tail-gunner in a Lancaster Bomber over Germany.
Mr Efune described his backers as “accomplished British patriots who care deeply about The Telegraph’s future”.
“Our acquisition group is also distinctly devoted to journalism,” he wrote.
“We don’t come with a team of financial engineers or restructuring gurus.
“We’re seasoned and committed newspaper builders, and have a detailed and clear vision for The Telegraph’s growth. We will pursue it vigorously.
“This includes specific and in some cases significant improvement strategies on the nuts and bolts of each of the primary revenue pillars of the business.
“In our view, the oft-heard moniker “Torygraph” far undersells this opportunity.
“In its soul, the paper that braved the Blitz and trumpeted the wartime speeches of Churchill bears a far higher calling.
“It is independent, pugnacious, meticulous, unapologetic and free.
“It is the journalistic bulwark of Western civilisation and a living reminder of Britain’s great gifts to humanity.
Mr Efune added that in a world characterised by turbulent geopolitics, “the need for The Telegraph’s elevation couldn’t be greater”.
“Many beacons of the Western press have dimmed, and we are all poorer as a result.
“The Telegraph’s time is now. Its horizons are endless.
“We’re confident our British group represents the best custodianship of this national treasure by some distance.”
Households on the energy price cap will see a 7% reduction in their average annual payments from 1 July, the industry regulator has announced while urging households to seek out the “better deals out there”.
The default cap – which is reviewed every three months – will see a typical household using gas and electricity and paying by Direct Debit stump up an average annual £1,720, Ofgem said.
That is down from the current April-June figure of £1,849 and reflects a reduction in wholesale gas prices.
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The lower cap, however, will be £152 higher than the same three-month period last year.
It does not affect the millions of households to have taken a time-limited fixed deal.
Nevertheless, it represents some relief for families grappling with the cost of living aftershock that saw many essential bills rise by well above the rate of inflation last month.
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Cost of living impacts families
Ofgem also confirmed further bill savings through a £19 average cut, from July, in standing charges for households paying by both direct debit and prepayment, following an operating cost and debt allowances review.
The price cap does not limit total bills because householders still pay for the amount of energy they consume.
The watchdog’s announcements were made just days after fresh forecasts suggested that bills linked to the cap could come down further from both October and January, given recent wholesale market price trends.
Industry data specialist Cornwall Insight estimated on Friday that the price cap was currently on course to rise only slightly in October – by less than £1 a month.
Wholesale gas costs last winter had been relatively stable until a cold snap hit much of Europe in January and early February, driving up demand at a time of weaker stocks.
Other risk factors ahead include extended EU gas storage rules and global conflicts, not least the continuing Russia-Ukraine war that sparked the 2022 energy price spike and cost of living crisis in the first place.
Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there, so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.”
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Ofgem said that a minority of homes, 35%, were on a fixed rate deal.
Price comparison sites lined up after the price cap announcement to urge households still on the default tariff to investigate a switch.
Tom Lyon, director at Compare the Market said: “If anyone is worried about potentially higher energy bills later this year, they could consider locking in a fixed rate deal now.
“Fixed rate deals also protect you from price hikes if the oil and gas markets are volatile. Beyond your energy bills, it’s important to search and compare other household bills, such as your car insurance, credit cards, or broadband, to see if you can make savings.”
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