Centrica Plc, the owner of British Gas, would’ve bid to buy the collapsed Bulb Energy Ltd. had the UK been transparent about the billions in subsidies it was offering to buyer Octopus Energy Ltd., lawyers said at the start of a London hearing looking at the deal.
(Bloomberg) — Centrica Plc, the owner of British Gas, would’ve bid to buy the collapsed Bulb Energy Ltd. had the UK been transparent about the billions in subsidies it was offering to buyer Octopus Energy Ltd., lawyers said at the start of a London hearing looking at the deal.
British Gas, Iberdrola SA’s Scottish Power and EON SE started a judicial review against the UK’s energy department for what it called “serious flaws” in the subsidy process that granted Octopus government support for buying Bulb out of special administration last year.
Bulb collapsed in 2021 when wholesale prices spiked above the regulator’s price cap, forcing it to sell energy at a loss. The UK government, which supported Bulb in the biggest bailout since the financial crisis, said it approved the deal with Octopus in order to protect consumers and taxpayers.
“If we had been treated the same, we would have bidprocess, we would have been better, and we would have won,” Paul Harris, British Gas’s lawyer, said at the hearing. Harris said “billions of pounds” of tax payers money had been spent to facilitate the acquisition.
The sale was waved through by a London judge to be completed in December, which transferred the relevant assets of Bulb into a new separate entity.
Chris O’Shea, Centrica’s chief executive officer, said that there was a “high probability” British Gas would have bid and wanted to proceed for Bulb. Lawyers for the firm said it had been “deliberately” not told about subsidies.
Octopus was set up in 2016 and steadily gained market share to become the fifth biggest UK energy supplier before the deal behind Centrica, which is the largest. Buying Bulb boosts its customer base by 1.5 million.
The UK government disputes the claims that the three energy companies were left out of the acquisition process. The onus is on the bidders to make proposals for government support to avoid “leading the market toward requiring support,” according to court documents.
“The evidence shows that the claimants had the opportunity to take part in the process for Bulb, but that all of them withdrew or stopped engaging for their own commercial reasons,” lawyers for Octopus said in court filings. The government “stands to make a profit from the transaction of around £1.19 billion ($1.4 billion).”
(Updates with the government’s arguments in the eighth paragraph)
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