Octopus Energy’s £1bn request to buy failed rival

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1st August 2022

Bite-sized business news from the UK and beyond

Good morning Congratulations to the Lionesses who gave England its first major football trophy since 1966 after beating Germany 2-1 in the final of the 2022 Women’s Euros last night.

Today's stories

Octopus Energy’s £1bn request to buy failed rival
Fast fashion giants investigated over eco claims

ENERGY
Octopus Energy’s £1bn request to buy failed rival

What happened?
Yesterday it was revealed that Octopus Energy has asked the government for £1bn to fund the takeover of rival energy provider Bulb that collapsed last year.

How did we get here?
Last November Bulb, Britain’s seventh largest energy supplier, went bust amid the turmoil in the energy market which saw gas prices double in a matter of weeks. But the energy price cap meant it was unable to pass on rising prices to customers.

Normally customers of failed suppliers are taken on by remaining providers. But Bulb’s customer base of 1.6m was far too many to transition overnight. Instead the company entered special administration which means it’s been run by the government – costing the taxpayer upwards of £2bn - until a new owner could be found.

Going once, going twice…
The government auction to sell Bulb attracted only one bidder, Octopus, the fifth largest supplier.

Sources close to the deal said it would involve Octopus paying between £100m and £200m to take on Bulb's customers. But a £1bn loan would be needed from the government to buy energy in advance aka hedging. Bulb doesn’t hedge its purchases of wholesale gas, leaving it exposed to soaring prices during an energy crisis which has been made worse by Russia's invasion of Ukraine.

Octopus would also give a portion of its profits to the government for several years on earnings from Bulb customers.

Next steps: Given the complexity it could take weeks for a final agreement to be reached. If successful taking over Bulb would give Octopus a customer base of 5m and cement its status as one of the most important energy providers in the UK.

Other stories to keep you in the loop

British Airways owner reports first profit since pandemic began
UK government in line for £1bn payout from NatWest stake
Mortgage affordability test scrapped by Bank of England
Britons are borrowing more and saving less as cost of living crisis starts to hurt
Details of £400 energy payment to households revealed
Instagram announces U-turn on TikTok-style changes after massive backlash

RETAIL
Fast fashion giants investigated over eco claims

What happened?
On Friday the UK competition regulator, the CMA, announced it was launching an investigation over the environmental claims made over the fashion by Asos, Boohoo and Asda.

How did we get here?
Fashion – from material sourcing, through supply chains to washing and waste - is one of the most polluting industries. It’s estimated that it is responsible for 10% of global carbon emissions.

In recent years fast fashion has come under heavy criticism for the role it plays in encouraging high and unsustainable consumption.

As a result, brands are trying to highlight the eco-friendly credentials of their products, for example, by claiming they are made from recycled materials.

However the CMA is concerned that consumers are being misled with false claims, so called ‘greenwashing’.

The CMA’s focus on Asos, Boohoo and Asda is all part of a wider review into the UK sector worth £54bn.

In January the watchdog identified concerns around potentially misleading sustainability claims including companies that were creating the impression that their products were better for the environment but with little evidence.

The CMA isn’t alone in shining a light on the fashion greenwashing. In June industry publication, The Business of Fashion, released its annual survey of sustainability efforts at the 30 biggest listed companies and found that no company scored more than 49 out of 100 on measures such as emissions, waste, chemicals and transparency.

Stat of the day

The final of 2022 Women’s Euros at Wembley was watched by 87,192 fans - a men’s and women’s Euro record

Interesting links from around the web

How to work from your bedroom without ruining your sleep
Tips for getting maximum cooling powers from your electric fan
Vardy v Rooney: 10 things we learned at the Wagatha Christie libel trial

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Octopus Energy’s £1bn request to buy failed rival

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