UK Government to Sell Failed Energy Supplier Bulb to Octopus

Lucca de Paoli, Todd Gillespie and Ellen Milligan
·2 min read

(Bloomberg) -- The UK government is close to a deal that will see Octopus Energy Ltd. acquire Bulb Energy Ltd., which went bust last November, as soon this week, according to two people familiar with the matter.

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Octopus, which already has more than 2 million customers, will become the UK’s third largest energy supplier after adding Bulb’s roughly 1.5 million households. The combined numbers could see it rival the market share of Centrica Plc’s British Gas and EON SE.

Bulb collapsed when wholesale prices spiked above the regulator’s price cap, forcing it to sell energy at a loss. The government stepped in and appointed Teneo Inc. to run the company with taxpayer money until a buyer could be found. The Office for Budget Responsibility had estimated a £2.2 billion cost over two years, with that likely to be recouped through levies on consumer bills.

Octopus and Bulb declined to comment.

“The Special Administrator of Bulb is required by law to keep costs as low as possible,” a government spokesperson said by email. “We continue to engage closely with them to ensure maximum value for money for taxpayers.”

Bulb Energy Chief Steps Down as UK Administrators Seek Buyers

The deal may involve the UK paying Octopus to cover the costs of Bulb, after the utility asked the government for £1 billion to cover costs incurred from volatile energy prices. Ovo Group had prepared a bid for Bulb which wouldn’t require government money to support it.

The sale will likely be completed in mid-November, following a court hearing on the administration process, one of the people said.

The UK hasn’t allowed Bulb’s administrators to buy power and gas far in advance because of the liability to the government’s balance sheet from soaring prices. Still, the state’s energy support packages, announced in September for homes and businesses, have left it exposed to essentially unlimited market risk until April.

(Updates throughout with context.)

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