The government has been accused of granting billions of pounds in unlawful subsidies to Octopus Energy to support its takeover of Bulb.
British Gas, E.On and ScottishPower have brought a legal challenge against the deal for the failed supplier, which was agreed by the government in October and included up to £4.5 billion of taxpayer support to help Octopus buy energy for Bulb customers.
The rival suppliers are asking the High Court to overturn the deal, which was completed in December, claiming that it was unfair because they were not offered the same financial support during the sales process. British Gas’s lawyer told the court that if it had been told about government support, “there would have been a bid by British Gas and [there] would have been a lower taxpayer cost”.
The government, Octopus and Bulb’s administrators argue that the case should be dismissed and have warned that unwinding the takeover would affect Bulb’s customers. Lawyers for the government have said potential bidders were aware government support was available but that it was not proactively offered “to avoid ‘leading the market’ towards requiring support”.
The administrators said in court filings they were entitled to ask potential buyers what they would need to make the deal work, which “allowed for the possibility that a bid requiring no or little [government] support might be made”.
Octopus argues that the deal is now expected to be “extremely beneficial” for the taxpayer. It said last month that the government was on track to make a £1.2 billion profit on the post-sale wholesale energy purchasing arrangements as a result of the recent falls in wholesale prices.
Octopus is now Britain’s third biggest supplier as a result of the Bulb takeover. The group reported a widened annual pre-tax losses last month of £166 million for the year to April 2022.