A High Court judge is to scrutinise £25mn of fees charged by the administrators of Bulb Energy, plus a further £3mn in pre-appointment costs which will ultimately be paid by the taxpayer.
Teneo applied to the High Court on Thursday to ask for its approval to be paid fees dating back to last November when it became administrator to Bulb, which was Britain’s seventh-largest household energy supplier.
Judge Sally Barber, Insolvency and Companies Court judge, heard that the application was the first of its kind in connection with a company in energy supply administration but ordered that the fees which cover an eight-month period should be analysed by a High Court judge.
Bulb was put into “special administration” in November 2021, initially with a £1.7bn taxpayer loan to keep it operating after it admitted to regulators that it was no longer able to withstand surging wholesale power and gas prices. The move represented the biggest taxpayer rescue since the bailouts of Royal Bank of Scotland and HBOS in the 2008-09 financial crash. It had 1.5mn customers.
The UK government recently agreed a sale of Bulb to rival Octopus Energy, although terms of the deal have not been disclosed. The opacity of the agreement has attracted criticism from opposition politicians.
On Thursday Judge Barber ordered 55 per cent of the fees to be paid as an interim measure but said the fees should be assessed by a High Court judge as certain aspects warranted “a fuller exploration of underlying evidence” than was possible in the two-hour hearing.
The judge singled out £5.7mn charged for 9,926 hours for work undertaken to secure business operations — when she noted that key Bulb staff had been kept on and their salaries paid by the government. “I simply raise this as an example of an area which would warrant a fuller explanation of underlying evidence. I make no criticism of the sums sought in relation to that activity stream,” she said.
She also pointed to a “significant amount of time” spent by administrators negotiating an indemnity agreement “for the benefit of the administrators”, saying she expressed no view but this would warrant greater scrutiny.
The High Court was told that 107 Teneo staff had worked on the administration and the Department of Business, Energy & Industrial Strategy (BEIS) had scrutinised and received fortnightly reports on work done.
Henry Phillips, barrister representing the administrators, said in written arguments to the court that BEIS had “negotiated a substantial discount (of 27.5 per cent) to the Energy Administrators’ normal commercial rates” to “provide best value for money to the UK taxpayer”.
The court document detailed the administrators’ seven main workstreams — including 9,926 staff hours charged to ensure the continued operation of the company’s business costing £5.7mn — plus an M&A workstream totalling around 2,409 staff hours costing around £1.6mn.
The energy administrators had been subject to “significant political, public and creditor scrutiny” and had “overseen and managed the running of an energy supply company to ensure 1.5mn customers received gas and electricity . . . in a highly complex, heavily regulated industry”, the written arguments continued.
Teneo declined to comment.