Octopus to buy Bulb: What 1.5 million customers need to know
The government has approved a deal between the administrators of failed supplier Bulb and rival firm Octopus to acquire its 1.5 million customers and 650 employees.
The transfer is expected to take place in November and comes after Bulb was placed in special administration in November 2021.
If you’re a Bulb customer, here’s what you need to know…
No change or action required from Bulb customers
If you’re one of the 1.5 million Bulb customers, you don’t need to do anything as it continues to operate as usual. The government confirmed you won’t experience any change or disruption to energy supply as Bulb exits the administration and customers are moved to Octopus.
Credit balances are protected, and all direct debits will be automatically transferred. As such, customers are urged not to cancel any existing direct debits. If you top up your energy, this continues to work as normal.
You will continue to pay energy at the same rate – the price won’t change because of the acquisition. It continues to be protected by the Energy Price Guarantee, the government confirmed.
Further, Bulb will continue to make Warm Home Discount payments to eligible members and it confirmed Energy Bills Support Scheme payments and vouchers will continue to arrive in the first 10 working days of the month, whether you pay by Direct Debit or top up.
If you have a smart meter, there’s no change, but Bulb suggests customers without a smart meter continue to note down readings.
The deal is subject to approval, but it is expected to complete and become effective from 17 November.
When it’s time to move to Octopus, you’ll be given new account details. Up until then, your Bulb account number will remain the same. Octopus will send you all the details about how to set up an online account and download their app. Up until then, you can keep using your Bulb app and account.
In the meantime, existing customers should contact Bulb with any enquiries rather than Octopus.
Octopus added it doesn’t expect the deal to have any negative impact on existing Octopus customers.
What happened to Bulb and how did we get here?
In 2021, rising global prices sent the UK wholesale price of energy to record high levels. Since September 2021, 29 suppliers have failed as they simply couldn’t absorb these costs and continue to run.
But challenger Bulb, which amassed 1.5 million customers, was placed into special administration in November 2021, which was designed to protect customers if a large energy supplier become insolvent.
It allows a business to continue to trade as usual, and if circumstances allow, for it to be sold “at an appropriate time, in full or in part”. It is different to regulator Ofgem’s Supplier of Last Resort (SoLR process).
Bulb’s special administrators have been running a sale process in the background and it has now reached a final agreement which will see Bulb’s 1.5 million customers transferred to Octopus Energy.
The sale will be completed following a statutory process called an Energy Transfer Scheme (ETS), which will transfer the relevant assets of Bulb into a new separate entity (Bulb UK Operations Limited to Octopus Energy Retail 2022 Limited) that will protect consumers during the transfer process. The process is subject to approval by the government and is expected to be ordered by the High Court by the end of November.
How much will it all cost and who pays?
During Bulb’s special administration, the government has been buying gas and electricity for Bulb’s 1.5 million customers – without hedging and during an energy crisis.
Octopus is paying the government a nine-digit sum to take on Bulb’s customer base and it will also pay a “high proportion” of any profits made through Bulb.
Octopus said: “The total amount Octopus is paying will be in the hundreds of millions of pounds”.
Taxpayers will also benefit from a profit-share agreement for a period of up to four years, “reducing the overall cost to UK taxpayers”.
The government “will provide the remaining funding necessary to ensure that the special administration is wound up in a way that protects customers’ supply”.
It added it can recoup these costs at a later date, “ensuring that we get the best outcome for Bulb’s customers and the British taxpayer”.
What do the firms have to say on the deal?
Greg Jackson, CEO and founder of Octopus Energy Group, said: “We take our responsibilities very seriously. 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.”
Matthew Cowlishaw, senior managing director at Teneo, and special administrator to Bulb Energy Ltd, said: “When the energy administrators were appointed in November 2021, our primary objectives were to enable Bulb to trade as usual while minimising the cost to the taxpayer. Following a thorough and extensive process over the course of almost a year, we examined all options and in conjunction with BEIS came to the conclusion that this transaction would provide the most value to the taxpayer.
“We are pleased that we have achieved the objectives of the special administration, especially against the backdrop of wider energy market disruption, and that the transition of employees and customers will provide certainty for both going forward.”
Meanwhile, Richard Neudegg, director of regulation at Uswitch.com, said: “Bulb’s customers have been in limbo for almost a year, without any clarity on what would be next after the supplier entered special administration.
“The announcement draws a line under that uncertainty, and confirms that Bulb will be acquired by Octopus Energy.”