Octopus Energy Group is taking on state-run Bulb Energy’s 1.5 million customers after securing approval from the British Government.
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Government approval was announced on Saturday, although the move comes after an almost year-long competitive and extensive sales process run by Bulb’s administrators.
Bulb collapsed last year amid rising gas and electricity prices and has since been run by the government since then ‘under special administration’.
The amount paid by Octopus Energy has not been officially disclosed but is believed to represent a higher amount per customer than suppliers typically paid to take on any of the 29 suppliers who have failed since September 2021.
According to the BBC, Octopus Energy paid the government between £100 million ($115.2 million) and £200 million ($230.3 million).
Octopus Energy will be in touch before system transfer and until then, customers will remain with their current Bulb teams. They have also stated their expectation that the transfer of ownership will not have a significant impact on Octopus customers.
Bulb customers’ credit balances will automatically get transferred to their new account with Octopus together with their existing direct debits. Octopus Energy has also stated that taxpayers will benefit from a profit share agreement for a period of up to four years.
According to the UK Government, there are four principal elements to the structure of the transaction:
The sale will be implemented using the Energy Transfer Scheme, which will transfer the relevant assets of Bulb into a new entity. This entity will subsequently be sold to Octopus and will remain ringfenced (to guarantee that funds will not be spent on anything else) from its core business for a defined period;
The transfer is conditional upon approval of the BEIS secretary of state and will take effect at a time ordered by the courts, likely 11 November, for the transfer to become effective, likely on 17 November;
The government will provide financial support to the new entity for the procurement of energy for Bulb customers over the course of Winter 2022. This financial support will be repaid by the new entity in accordance with an agreed repayment schedule;
A profit-share agreement will be put in place for the ringfenced business until the agreed funding is repaid by Octopus. Under this structure payments to shareholders or the wider Octopus group from the ringfenced entity would be restricted until the repayable funding to government is repaid.
On the announcement, UK business and energy secretary Grant Shapps said: “This government’s overriding priority is to protect consumers and [the sale] will bring vital reassurance and energy security to consumers across the country at a time when they need it most.”
Octopus will continue to use Bulb’s technology and brand for a transitionary period with the aim of ensuring a smooth transfer for Bulb’s customers. In addition, customers will continue to benefit from Ofgem’s supply licence protections, such as ensuring energy suppliers provide advice for vulnerable customers through existing financial support schemes.
Earlier this year, Octopus Energy completed the migration of over 580,000 customers of Avro Energy to its systems – the largest customer migration ever conducted under the supplier of last resort (SOLR) process.
Bulb, still the 7th largest energy supplier in the UK, is also one of the newcomers in energy retail. Launched in 2015, its aim was to provide fair and transparent pricing and use tech to help its customers manage and reduce their energy usage. The company grew to over 1.5 million customers thanks to the team’s focus on growth and smart, green products.
