Extravagantly paid energy tyro Hayden Wood’s “too-big-to-fail” failed supplier Bulb, once the doyen of lying premier Johnson, finally collapsed into the arms of Octopus Energy today.
After a competition between suitors, Teneo Restructuring, special administrators handling the revival of the failed, poorly-hedged retailer’s 1.5 million customers, transferred its legal title two minutes before midnight to privately held Octopus, the acquiror announced.
Todays’ deal will push the seven year old Octopus, now with 4.9 million customers, to third place among UK energy suppliers, behind British Gas and E.ON,
After Lazards bank acted for the administrator to introduce Octopus, energy secretary Grant Shapps signed off on the deal on 7 November. It was later approved by the High Court.
Commercial terms were not disclosed. But Bulb is rumoured to have cost Octopus between £100m and £200m.
Bulb’s co-founder Wood – pictured – , a former Bain management consultant, was retained by Teneo on a consultancy fee reported at £250,000 per year, for eight months after the poorly hedged, never-profitable supplier’s collapse.
Despite recent reported protests of opaque sales processes from rivals British Gas, Octopus today hailed its redemption of the biggest of Britain’s 29 failed energy retailers as saving taxpayers millions.
A profit share agreement forming part of the deal will reward the Treasury. And Octopus’ acquisition means the government is no longer directly exposed to price volatility in the wholesale energy market.
Under a new Energy Transfer Scheme engineered by Teneo, Bulb’s assets are now moved into a ringfenced business, separate from Octopus.
Greg Jackson’s integrated generator-retailer will run Bulb’s operations at arm’s length, at least temporarily. Customers will remain on Bulb systems, their accounts managed by Bulb agents.
“This starts to bring an end to the huge financial exposures for taxpayers and paves the way for a better and more certain future for Bulb’s staff and customers”, Jackson said today.
“For now, we’d ask Bulb customers to sit tight. We’ll be in touch with customers as and when their account is ready to move to Octopus’ award-winning systems.”
The Guardian reported last month that the Office for Budget Responsibility estimates the public cost of running Bulb has increased by £4.6bn since March to £6.5bn, exceeding the gloomiest forecasts of around £4bn. According to the OBR, it threatens to add £200 each to household bills, on top of £94 for other supplier failures.
Valued at around $ 5 billion after 2021’s stakebuilding by private north American investors, Octopus believes it is paying the government more per account to take on Bulb’s customer base than suppliers typically paid under Ofgem’s Supplier of Last Resort (SOLR) mechanism.
Twenty-nine such SOLR transfers have protected millions of customers whose providers crashed since September 2021, with taxpayers picking up the estimated £2.7 billion cost. Of those twenty nine, Octopus has completed more than ten acquisitions of energy supply companies and their clients.
Today it highlighted its most recent, the transfer of over 580,000 Avro Energy customers to its Kraken platform, believed to be the largest account migration ever conducted under SOLR.
Legal challenges may still snag Octopus’ acquisition of Bulb. Actions for judicial review against D-BEIS’ sale of Bulb are due before judges in the New Year.