About 1.5 million households supplied by Bulb face months more uncertainty after a judge said a legal challenge against its sale to Octopus Energy could not be heard until next year.
The deal is due to complete this year but is subject to a judicial review brought by British Gas, Scottish Power and E.on, who are unhappy at the opacity of the terms and the financial support to Octopus from the government.
If the judicial review succeeds and the deal is quashed after it has completed, this could lead to considerable disruption, big financial losses to Octopus and could affect energy supplies for Bulb’s customers, the court was told.
Bulb was Britain’s seventh biggest energy supplier when it collapsed in November last year as energy prices soared. It has been run in government-funded special administration since then. In October Whitehall struck a deal to sell Bulb to Octopus, the only eventual bidder in a sales process.
The Office for Budget Responsibility disclosed last month that the final cost of the bailout of Bulb was estimated at £6.5 billion.
Octopus is expected to pay more than £100 million to acquire Bulb. The deal will mean the Bulb business moving to a new entity known as HiveCo that will be ringfenced within Octopus. The government will provide financial support, believed to be more than £1 billion, to HiveCo to fund its energy purchases this winter, though this is due to be repaid before the ring-fencing ends. A judge last week said the transfer could proceed on December 20. Yesterday the government and Octopus argued that the judicial review should be heard before then.
Octopus said it was not feasible to postpone the deal and that if quashed after it had gone through, HiveCo “would be rendered insolvent” and Octopus may be unable to recover its equity and could “suffer significant loss”.
The judge also heard claims that attempting to reverse the transfer to Bulb after it had gone through “could put at risk the energy supplies” to the customers of HiveCo. However, the judge ruled the judicial review needed more time and that the “least worst option” was for it to be heard early next year.
British Gas, Scottish Power and E.on have complained that they were unaware that financial support was available during the sales process, though Octopus has challenged this.
Greg Jackson, chief executive of Octopus, said rival suppliers “had their chance and walked away . . . They can’t compete on service or value so are resorting to the courts, increasing costs and uncertainty for taxpayers.”
The companies have also sought to cast doubt on Octopus’s financial health. In court filings yesterday they disclosed that Ofgem had written to the government noting “risks around the resilience of the combined entity” once government support ends.
However, Octopus said: “Ofgem looked at all potential risks and when it assessed them concluded it was prudent to recommend the deal.”
A government spokesman said supplies to Bulb customers “are not at risk”.