Octopus Energy is close to clinching a takeover of stricken rival Bulb in a deal that will crystallise up to £4bn of losses for British taxpayers.
Sky News has learnt that ministers at the Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) have been told that a sale of Bulb’s 1.6m-strong customer base is now the optimal outcome.
Industry sources said this weekend that the government and Bulb’s special administrator, Teneo Financial Advisory, were preparing to sign a binding agreement to sell the company to Octopus Energy by the end of this month.
The transaction, which is said to have the backing of industry regulator Ofgem, would be targeted for completion in December, according to one of those insiders.
If completed, it would end nearly a year of uncertainty over the fate of Bulb, Britain’s seventh-largest residential power supplier at the point of its collapse.
The government has already been forced to spend billions of pounds buying gas to supply Bulb customers because the company did not hedge its purchases in order to fix its cost base.
Wholesale gas prices have soared over the last year, with Vladimir Putin’s invasion of Ukraine having a particularly pronounced impact on global energy markets.
Sky News revealed during the summer that Octopus Energy, run by Greg Jackson, was seeking a £1bn taxpayer funding package to seal the takeover of Bulb.
The independent Office for Budget Responsibility (OBR) said in March that the bailout of Bulb would require more than £2bn to cover its operating losses, although that figure is since understood to have soared.
Nevertheless, it is still dwarfed by the cost of subsidising household and business energy bills for the next six months, which the Centre for Economics and Business Research, a think-tank, recently estimated at in the region of £30bn.
Liz Truss’s administration is seeking long-term gas supply deals with foreign states but has been warned by Treasury officials that it faces paying a “security premium” because of elevated current prices, reports said this week.