Octopus Energy buys failed rival Bulb

Failed UK energy firm Bulb is to be bought by Octopus Energy, bringing an end to a year-long nationalisation that has cost the taxpayer at least £4bn.

In a statement released on Saturday, Octopus said it would take on Bulb’s 1.5mn customers.

Bulb was Britain’s seventh-largest household energy supplier when it collapsed last November as the result of soaring energy prices, inadequate capitalisation and its failure to buy gas in advance.

Its bailout is expected to be the most expensive since the rescue of RBS during the 2008 financial crisis.

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.

Treasury rules prevent administrators of nationalised companies from hedging. It was previously reported that Octopus would pay more than £100mn upfront for Bulb and also pay a percentage of any profits on the customers it inherits from the company, according to people familiar with the talks.

On Saturday Octopus said that it would pay the government to take on Bulb’s customer base, and that taxpayers would benefit from a profit share agreement for a period of up to four years.

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.”

Additional reporting by Reuters