A legal challenge brought by British Gas, Eon and Scottish Power over the acquisition of Bulb’s customers by Octopus Energy has been thrown out by High Court judges.
In the ruling published today (31 March) High Court Lord Justice Singh and Mr Justice Foxton rejected the suppliers’ claim for a judicial review on the grounds that they took too long to lodge their claim.
The ruling added that even if the suppliers had acted earlier, the case would have still been rejected.
The hearing challenged the decision on the grounds that Octopus was offered different terms to other suitors for the nationalised energy supplier and that the secretary of state could have secured a better deal.
British Gas owner Centrica said it was subject to “discrimination” in the bidding process and in documents submitted to the court, Centrica argued that the decision was “arrived at by an unlawful and unfair process”.
The government hit back at these claims however, saying allegations made by rival suppliers were all “without merit”.
A summary of the ruling said: “The Court concluded that the need for urgency in bringing any public law challenge was clearly apparent by 11 November 2022, and it was incumbent on the claimants to move very speedily after that date.
“The claimants were aware of the essential substance of their grounds for seeking judicial review at that stage. In those circumstances, the court concluded that the applications for permission must be refused on grounds of delay alone.”
The ruling added that granting a judicial review application after such a long time “would be likely to cause substantial hardship” and have a “detrimental” impact on members of the public affected by the sale of Bulb. To date, more than one million customers have already been transferred on to Octopus accounts.
The court additionally rejected claims that the secretary of state had acted unlawfully.
A Department for Energy Security spokesperson said: “We welcome today’s judgment. The court has confirmed the robustness and legality of the secretary of state’s actions in respect of the sale and administration of Bulb.
“In doing so, he has protected Bulb’s 1.5 million customers, while delivering value for the British taxpayer.”
Responding to the ruling Michael Lewis, Eon UK chief executive, said: “A huge amount of public money has been used to subsidise this transaction and it’s absolutely correct that any use of public money to help a private company grow in this way should be thoroughly scrutinised.
“We will analyse the detail of today’s ruling and consider our next steps, including whether to appeal, but we remain concerned about the amount of taxpayers’ money that has been used to subsidise the deal.
“Only an open, fair and transparent process would have ensured this truly represented value for money for the public and we still cannot see how this was the case with only one bidder in the key stage of the negotiations.”
‘Trail of destruction’
He added: “The background to this whole issue is a lack of proper financial controls on new entrants to this market and that their risk-taking behaviour was never properly managed. These failings allowed companies like Bulb – and nearly 30 others – to effectively use and lose customers’ money, leaving a trail of destruction when they failed, with the British public picking up the tab.
“We urgently need to establish rules that mean customers’ money cannot be used to fund a business when suppliers have no equity on their balance sheet.”
An Octopus Energy spokesperson said: “The High Court’s findings are clear: Octopus paid a fair price for Bulb in an open and competitive process.
“The High Court was equally clear that there was no merit at all in the case brought by British Gas and the other legacy companies.
“It’s clear that the case was a desperate attempt by those organisations to defend their waning market positions against a more efficient and customer-focused rival.
“The judge recognised the extensive level of information shared by Octopus, the government and the administrators, which far exceeded what would be normal.
“Our focus is now on delivering the best service possible to our new and existing customers.”
Bulb was the most high-profile failure of the energy crisis when it became the first ever retailer to enter the government’s Special Administration Regime (SAR) in November 2021.
Following a year-long competition process in which it is understood Centrica and Abu Dhabi-based energy company Masdar were in the running, Octopus was selected as the supplier to take on Bulb’s 1.5 million customers. The deal means Octopus now supplies almost 5 million customers in the UK.
Earlier in March Octopus announced that it had migrated 1 million former Bulb customers on to its systems in under three months.
A further 500,000 customers will be transferred on to its Kraken platform in the coming months.