Octopus Energy has won the race to take on Bulb’s 1.5mn customers in a deal that will see the government help fund the cost of buying them gas and electricity supplies this winter.
The acquisition, announced on Saturday morning, will see Bulb move out of effective nationalisation that has cost taxpayers in excess of £4bn, after it became the largest and most high-profile of the UK energy retailers to collapse last year.
Bulb was Britain’s seventh-largest household energy supplier when it collapsed in November as the result of soaring energy prices and its failure to buy gas in advance, but was deemed too large at the time to be absorbed by other suppliers.
Its bailout is expected to be the most expensive since the rescue of RBS during the 2008 financial crisis.
Octopus has been the frontrunner to take over Bulb’s customers since the summer but had to see off an eleventh-hour bid from rival Ovo Energy that emerged this month.
The privately held company did not reveal exactly how much it was paying to take on Bulb’s customers, but said that it believed it was paying a higher rate than energy retailers paid when taking on customers of other failed suppliers last year.
The government will partake in a profit share agreement over the next four years, the company said, without revealing how this would be structured.
The government will help fund the purchase of gas and electricity for Bulb’s 1.5mn customers this winter. Under Treasury rules, which restrict hedging, Bulb has not been able to buy gas and electricity in advance.
It was previously reported that, according to people close to the Octopus bid, Octopus had asked the government to lock in Bulb’s fuel purchases at a cost of about £1bn, although the government would be repaid as the energy was used.
Bulb customers’ credit balances will be automatically transferred to their new account with Octopus together with their existing direct debits, the company said.
Earlier this year Octopus took over 580,000 customers of Avro Energy, another failed firm.
The sale “will bring vital reassurance and energy security to consumers across the country at a time when they need it most”, business and energy secretary Grant Shapps said. “This is a fresh start.”
Greg Jackson, Octopus chief executive, said: “We will work unbelievably hard to deliver value for taxpayers and to look after Bulb’s staff and customers. We started off as rivals but shared the same mission — driving a greener, cheaper energy system with people at the heart. We know how important this is to Bulb’s loyal customers and dedicated staff, and are determined that Octopus can provide them with a stable home for the future.”
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