Sale of energy firm Bulb to Octopus challenged at High Court after 'flurry' of applications

A High Court judge is due to rule on whether to delay the proposed sale of collapsed energy company Bulb to Octopus Energy following new legal challenges from rival suppliers.

A hearing on Tuesday was told that a “flutter” of judicial review applications had been made in the last 24 hours, amid energy companies seeking to delay a legal process that could enable the sale to be completed.

Scottish Power, British Gas and Eon have lodged urgent High Court bids to challenge the lawfulness of decision-making over the proposed Bulb transaction, the court heard.

Stephen Robins KC, for Scottish Power, said in written submissions that the marketing of Bulb – a failed supplier bailed out at a forecasted cost to taxpayers of £6.5 billion – was “defective” and should be re-run to allow for alternative bids.

He said Octopus had effectively received a “cash gift” or “dowry” from the Government in relation to the Bulb transaction, full details of which rivals had not seen.

Jonathan Adkin KC, for British Gas, alleged in court there had been an “abject lack of transparency” over the deal with the provider being “stonewalled” in requests for information.

But Richard Fisher KC, representing Bulb’s administrators from the Teneo consultancy firm, rejected Scottish Power’s “highly controversial” version of events and said in written submissions that other energy companies had decided to “walk away” from the sale process.

In October, Octopus announced it had sealed a deal to buy its rival and would be taking on Bulb’s 1.5 million customers after the 650 employee firm was placed into special administration in November 2021.

The Department for Business, Energy & Industrial Strategy (BEIS) previously confirmed an agreement had been reached between special administrators of Bulb and Octopus, and that the sale will be completed following a statutory process called an energy transfer scheme (ETS), which will move Bulb’s relevant assets into a new separate entity that will “protect consumers during the transfer process”.

Business and Energy Secretary Grant Shapps announced he had approved the scheme earlier this month, to take effect on a date ordered by a High Court judge.

But Bulb administrators’ bid to secure a transfer start date of November 15 was delayed at a court hearing earlier this month after the rival energy companies raised concerns.

At Tuesday’s further hearing, Mr Robins argued that in light of funding offered to Octopus there should been a “reverse auction” of Bulb, adding that “there was no attempt to see if anybody else would do it for less”.

In written submissions, he said: “The Government and the administrators have not carried out a competitive, transparent and non-discriminatory process with all prospective bidders to determine the amount of Government support or funding, if any, which they would need to acquire (Bulb’s) undertaking or any part of it.”

Mr Robins claimed press reports indicated £1 billion of funding was being offered to Octopus by the Government, but there were so many redactions to documents that “the deal is impossible to understand”.

He added that if the sale process was run anew, there could be additional bids and Bulb “might well not need to be saddled with a 10-figure debt to fund a ‘dowry’ to the purchaser”.

Mr Fisher told the court that “there must be an ETS time set otherwise the transaction will fail” and requested a start date of December 20.

In written arguments, he said that rival energy companies had opportunities to participate in the sale process and could have sought meetings with the Government or administrators to investigate funding options.

“Ultimately, they each decided, for their own reasons, to walk away from that process,” he said.

He added that the court was “simply concerned with whether the transfer will mean that it will become unnecessary for the company to remain in administration in order to supply energy at the lowest cost that it can reasonably incur”.

Mr Fisher told the judge, Mr Justice Zacaroli, that he was concerned with “simply what time the ETS should be made effective” and should not undertake a “wholesale review” of its approval.

The barrister said in written submissions that it would be a “recipe for confusion” if the court had to carry out “a rival and overlapping function” to Mr Shapps, who was required to take into account the public interest and the impact on third parties when granting approval.

Mr Adkin told the court that the ETS decision should be put back pending an outcome in the judicial review proceedings.

He said Octopus would be taking an “enormous commercial risk” of pursuing a deal that could “end up falling apart in the most chaotic way”, with “pretty horrendous consequences for the energy market”.

Tom Hickman KC, also for the administrators, accused the rival companies of trying to “obtain an interim injunction by the back door” with new legal challenges coming “very late”.

He said that unless an order quashing Mr Shapps’s actions is granted by a different part of the High Court then “the Secretary of State’s decision is entirely valid”.

Mr Justice Zacaroli indicated he may give a ruling in the case on Wednesday, with full reasons to follow at a later date.