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Octopus Energy is supporting 580,000 customers stranded when Avro Energy went out of business last week and is at the center of speculation it could bid for another player, Bulb Energy.
As the UK gas crisis continued to wreak havoc on the industry, the regulator, Ofgem, appointed Octopus to take over the supply of Avro Energy customers after what has been described as a competitive process. “To get the best possible deal”.
Octopus had 2.5 million customers before the announcement, and Sunday’s decision brings that number to around 3.1 million. In a message to newcomers, the company said, “We have a strong track record of major customer migrations and want to reassure customers that there will be no disruption or impact on their energy supply. . “
The collapse last week of Avro Energy and another company, Green, which had more than 250,000 customers, brings to seven the number of suppliers that have caved in under the pressure of record gas market prices in just a short period of time. more than six weeks, affecting 1.5 million households.
Ofgem said the switch from Avro to Octopus will take effect immediately and that while the news “can be troubling”, customers need not worry. Unpaid credit balances, including amounts owed to current and former Avro users, would be honored.
Octopus will support Avro customers through Ofgem’s Supplier of Last Resort (SoLR) process.
Gillian Cooper, head of energy policy for Citizens Advice, said Octopus must continue to protect vulnerable Avro customers once they have transferred their supplier.
“Anyone who is struggling to pay their bills should be taken care of, and Octopus Energy should ensure that any debt repayment plans Avro Energy customers may have resorted to are upheld,” Cooper said. “It is important that they continue to offer the Warm Home rebate to all customers who have previously received it from Avro Energy. It is up to the government and Ofgem to work with the suppliers to make sure this happens.
Octopus has been named in the reports as one of the suppliers who might consider bidding for a competing brand, Bulb. Bulb, which has 1.7million customers and recorded a loss of £ 63million as of March 31, 2020, is currently seeking new investments to fund the business.
Both Octopus and Bulb claim to provide their customers with 100% renewable electricity from solar, wind and hydropower. Any merger between the two would create a large supplier with nearly 5 million customers that could pose a stronger competitive threat to the energy giants.
Bulb’s financial advisers at Lazard have set up a data room to provide potential funders with key documents and information so they can review his finances.
A senior City source said Bulb had been looking to raise funds for some time and there was no reason to believe the company faced an imminent threat to its survival or was seeking a bailout. However, the current turmoil, with forecasts of a difficult winter ahead, may mean it struggles to find new funders.
Octopus entered the market in 2016 and claims to have registered 50,000 customers per month. He was very critical of the big players who dominate the industry, saying: “The energy industry in Britain is run by a handful of complacent dinosaurs peddling fossil fuels, price deception. and poor customer service. “
Bulb, meanwhile, says it supplies 100% renewable electricity to homes in the UK, France, Spain and Texas in the US, and 100% carbon-neutral gas in the UK.
Discussions about a possible Octopus offer were first reported by Sky News.
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There are fears that millions of homes will lose their energy supplier by the end of winter, providing a growth opportunity for incumbent supply giants after years of losing customers to more competing brands. small.
A Bulb spokesperson declined to comment on the speculation, saying: “From time to time we explore various opportunities to fund our business plans and continue our mission of reducing bills and CO emissions.2. Like everyone else in the industry, we monitor wholesale prices and their impact on our business.
When asked about Bulb, Octopus said he had not commented on M&A rumors or speculation.
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