The sale of Bulb Energy to Octopus Energy could breach European Union (EU) state aid rules in Northern Ireland, argued Centrica, amid an increasingly protracted legal battle over the fallen firm’s future.
In court documents filed last week, the British Gas owner and rival EON both argued that Octopus’ trade in heat pumps between Northern Ireland, where it owns manufacturer RED, and the EU could make the Bulb deal eligible for EU scrutiny.
The two energy firms suggested there was “reason to believe the subsidy in question may be in contravention of Article 10 of the Ireland/Northern Ireland Protocol.”
This includes prohibition on providing new aid, unless cleared by the European Commission, that affects trade in goods between Northern Ireland and Europe.
The potential of a showdown between the UK and the EU over the Bulb deal would only be the latest dramatic chapter in the supplier’s sale, with Centrica, EON and Scottish Power pushing for a judicial review of the deal.
The firms have raised concerns over the lack of perceived transparency in the deal, including the provision of state funds to ensure the sale is greenlit and have also argued the deal could distort competition in the energy market.
If Octopus succeed in their acquisition of Bulb, it will become the third biggest supplier in the UK with five million customers.
The Government has not revealed the terms of the deal but City A.M. understands Octopus has received as much as £1bn from taxpayers as hedging support, to cover Bulb’s 1.6m customers.
Meanwhile, the Office for Budget Responsibility the cost of Bulb’s year-long bailout could rise to £6.5bn or around £200 per household.
The transfer of Bulb’s customers is set to take place on December 20, however the process is now expected to be reviewed in a hearing as soon as February.
The question of whether an unlawful subsidy has been granted under post-Brexit UK legislation will likely be decided in the domestic courts.
Industry sources told City A.M.: “While legally interesting, it certainly gives the indication Centrica feel very threatened by a larger Octopus.”
Centrica, EON and Octopus have been approached for comment.