Octopus Energy takes on Avro Energy’s 580,000 customers and speculation grows that it may make a bid to buy Bulb
Ofgem has assigned Avro Energy’s 580,000 customers to Octopus Energy under its Supplier of Last Resort (SoLR) process. Meanwhile, speculation is growing that Octopus may make a bid for Bulb.
What happened?
Last week was grim for the retail energy market as it continues to be rocked by unprecedented high wholesale energy costs and market turmoil.
The crisis resulted in Avro Energy becoming the ninth energy supplier to close this year as it struggled with its costs. As a result, its 580,000 customers were put into the regulator’s SoLR process, the largest number yet.
With concerns over the financial impacts of supplier failures, some of the larger suppliers are hesitant to take on more customers due to the costs involved. Octopus Energy, however, stepped up and will add Avro’s customers to its 2.4 million customer base across the UK, Germany, Australia, Japan, New Zealand and the USA.
The move to take on Avro’s customers will cement Octopus Energy’s position as one of the biggest suppliers in the UK.
Worries over the market prompted some worried consumers to ask whether Octopus itself was safe from closure prompting the company’s founder Greg Jackson to say: “No – as a global, very well backed company we’re fine but plenty more are not. There’s no glee in seeing other companies fail which is why we’ve launched a special recruitment drive to help some of those losing their jobs in those companies. Make no mistake – there are real issues in energy caused by global gas and shortfalls in UK nukes – but the idea of ‘crisis’ is being pumped up by the former Big 6 in order to try to bounce govt and regulators into restoring the cosy oligopoly they used to enjoy.”
Also read: Wholesale Energy Prices, Bad Debt and the Price Cap are proving detrimental to Energy Suppliers
Why Octopus?
Ofgem announced on Sunday that Octopus had been assigned Avro’s domestic customers following a competitive process. However, some in the industry raised contention with that statement as they say that the number of suppliers with balance sheets strong enough to take on large numbers of customers is growing smaller by the day.
“It’s impossible for anyone but the very biggest companies to re-home customers given it requires a lot of capital upfront, even though costs can ultimately be recouped from customer bills,” said the chief executive of Utilita, Bill Bullen.
Government support for suppliers unlikely
The impacts of failing energy suppliers are currently being focused on as costs soar and concerns mount that energy bill payers will be the hardest hit.
The worries prompted some in the industry to call for the government to provide financial assistance, but the move by Octopus to take on Avro’s customers is likely to lend support to the government’s decision to back away from providing a rescue package for the sector.
Is Octopus seeking to take control of Bulb?
According to a report from Sky News, Octopus Energy has requested access to data set up by Bulb’s financial advisers in an attempt to find new funding over the next few weeks.
If the speculation proves true, Octopus would acquire Bulb’s 1.7 million customers and make it an even bigger challenger to the established order that includes the likes of British Gas, EDF and others.
A Bulb spokesperson said: "From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2. Like everyone in the industry, we're monitoring wholesale prices and their impact on our business."
Also read: Bulb Energy makes deal to delay repaying £55 million of Loans as rising wholesale prices bite
Shell Energy takes on Green Supplier Limited customers
Separately, the customers of the failed supplier Green Supplier Limited have been given to Shell Energy under the SoLR process.
The action means that Shell will add 255,000 domestic customers, and a small number of non-domestic customers to its books.
Neil Lawrence, Ofgem’s director of retail, said: “I am pleased to announce we have appointed Shell Energy for the customers of Green Supplier Limited. We understand that this news may be unsettling for customers, however they do not need to worry. Their energy supply will continue as normal, and customer credit balances will be honoured. Shell Energy will be in contact with customers over the coming days with further information. Once the transfer has been completed, customers can switch if they wish to.”
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Further Reading
Get rid of green levies to support energy suppliers and cut energy bills says E.on boss
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