Three of Britain’s largest energy suppliers on Friday lost a legal challenge against the UK government over its handling of the high-profile sale of Bulb, the power supplier that was quasi-nationalised and sold to Octopus with as much as £4.5bn of taxpayer support.
Centrica, Iberdrola SA’s Scottish Power and Eon had brought a judicial review against the UK government, alleging its decision-making had been unlawful in allowing the Bulb sale to go ahead. The Bulb transfer last October was the largest state bailout since the 2008 financial crisis.
Bulb collapsed in November 2021, when wholesale prices spiked above the regulator’s price cap, forcing it to sell energy at a loss. The energy company was temporarily nationalised, then sold to Octopus in a sale process run on behalf of the government.
The three energy companies brought a legal challenge to the High Court over the government’s decisions to approve the Bulb sale and provide “very substantial” state funding for the transfer. They argued ministerial decision-making had been “flawed” and “unlawful” as the Bulb auction process had been unfair and the government had breached state subsidy rules.
In a recent court hearing, Centrica argued that if it had known state subsidies were on offer, it would likely have made a bid for Bulb. Centrica accused the government of a “lack of transparency”. Eon claimed it was never given any indication that “anything like the scale of subsidy” eventually made was available. Scottish Power claimed the Bulb sale decision was “product of a fundamentally unfair process”.
The government defended its handling of the sale and warned unpicking the Bulb transaction would “cause chaos”.
On Friday the High Court dismissed the lawsuit and ruled in favour of the UK government, saying the case had been brought with “undue delay.”
Lord Justice Rabinder Singh and Mr Justice David Foxton ruled on Friday that they were “entirely satisfied” that the government “was reasonably entitled to conclude” that the sale process had been conducted as an “open, non-discriminatory and competitive bidding process”.
The judges also rejected arguments that the government’s decision had involved the grant of an unlawful subsidy saying that it was “a proportionate response to a national or global economic emergency, namely the Russian invasion of Ukraine”.
The Department of Energy Security welcomed the ruling. “The court has confirmed the robustness and legality of the Secretary of State’s actions in respect of the sale and administration of Bulb,” it said.
Octopus Energy said: “The High Court’s findings are clear: Octopus paid a fair price for Bulb in an open and competitive process.”
Centrica called the ruling “disappointing” and said that it would consider its options.
Michael Lewis, chief executive of Eon UK, said the firm would consider next steps, including whether to appeal: “We remain concerned about the amount of taxpayers’ money that has been used to subsidise the deal.”
ScottishPower is not thought to be seeking to appeal the ruling.