Ovo Energy (Ovo) has launched a last gasp bid to snatch Bulb Energy (Bulb) from the tentacles of rival supplier Octopus Energy (Octopus).
In an eleventh-hour swoop, City A.M understands Ovo boss Stephen Fitzpatrick has written to Bulb’s special administrator, Teneo, and confirmed its renewed interest in the de-facto nationalised energy firm.
The approach was first reported by Sky News.
Ovo reportedly first made a play for Bulb and its 1.6m customers shortly after it collapsed into special administration last November,
However, Ovo appeared to pull out of the running this summer, with Octopus seemingly left as the last suitor standing – with both Masdar and British Gas owner Centrica pulling out.
The renewable-only supplier has now returned to the fold, and is not pushing for taxpayer funding to support a hedging strategy, according to Sky News.
By contrast, Octopus has been pushing the Government for £1bn in public money to support a hedging strategy, which has been discussed between Downing Street and the supplier for several months.
Bulb has been buying energy on the spot markets for eleven months, amid severe market turmoil and record wholesale costs, driving up the cost of its special administration to £4bn – which is expected to eventually be paid by energy users nationwide.
If Ovo manages to gazump Octopus, it will be quite the turnaround for the energy firm, which feared for its future as an energy firm before the Government announced a historic rescue package for households.
It expected to breach banking covenants during 2022 because of soaring prices, according to accounts filed for 2021 and published by Companies House in September.
Ovo warned the energy market had created “a material uncertainty that may cast significant doubt on the group’s and company’s ability to continue as a going concern”.
Octopus deal close to completion
Despite the late swoop, City A.M. understands the Government and Octopus are close to reaching a deal and that Downing Street is receptive to the terms offered by the supplier.
Octopus is set to pay the Government a £100m-plus fee up front and offer a slice of the revenue from Bulb’s customers with a profit-share agreement.
This will give Downing Street a healthy return for several years on earnings from Bulb customers.
An announcement for the deal was expected in the coming weeks.
The eventual offloading of Bulb will conclude a dismal chapter for the Government and the UK energy market – which has seen 30 suppliers collapse over the past 15 months.
Energy firms have struggled amid soaring wholesale costs, and insufficient hedging strategies.
Bulb’s collapse in November 2021 was the most significant of the supplier failures – with the firm going into special administration rather than seeing its customers ferried to other companies via the supplier of last resort process.
Since then Ofgem has sought to scrub up the energy market – bringing in financial stress tests, fit and proper person rules and a quarterly price cap.
Octopus, Ovo, Teneo and KPMG all declined to comment.