Three British energy operators have filed a lawsuit in the British courts to challenge Octopus Energy’s allegedly opaque takeover of energy provider Bulb, which is on a government bailout after its bankruptcy at the end of 2021. The proceedings opened on Tuesday for three days at the High Court of Justice in London.
Challenge to the British government’s decision
Three of Octopus’ competitors –Centrica (British Gas’ parent company), E.on and Scottish Power– are challenging the British government’s decision to approve the deal in late October. In particular, they denounce the billions of pounds of public money put on the table as part of the government’s rescue plan and then the sale of Bulb, in a transaction they consider opaque, the precise terms of which have not been communicated and which enabled Octopus to recover 1.5 million customers.
Billions in subsidies for an opaque transaction
The sale of Bulb “distributes billions of pounds of taxpayer-funded subsidies but offers neither the clarity nor the transparency that the British public deserves,” E.on denounced Tuesday in a statement sent to AFP. “In the end, this agreement will add about 200 pounds (228 euros) to the energy bills of everyone in the country,” the operator estimates.
Bulb under government funding
Bulb had explained in November 2021 that it was hit by rising wholesale prices and found itself selling energy “largely at a loss” due to the UK authorities’ price cap. The group was the largest of about 30 energy suppliers to go bankrupt at that time, out of about 50 in the market, which justified direct government intervention.
Octopus was “the only (company) to submit an offer” for Bulb, the government recalled Tuesday in a statement sent to AFP, stating that the sale was officially concluded on December 20 and that the transfer of customers was currently underway.
Final cost to the public purse
Estimates of the final cost to the public purse of rescuing Bulb vary, but the state budget forecasting agency OBR put it in November at £6.5 billion. According to several media outlets, the sharp decline in energy prices on the markets over the past several months could, however, drastically reduce the final bill for the government and therefore for the taxpayer compared to initial estimates.
The decision will probably take several weeks, if not longer, according to a source close to the case.
