Today the National Audit Office published its report into the Bulb Energy special administration and related sale to Octopus.

For those with an interest in the sector, the report is well worth a read as it goes into great detail on some of the specifics of the first (and, currently, only) energy company special administration.

The report is broken down into 4 sections: (1) Introduction; (2) The Special Administration Regime; (3) The sale process and transaction agreement; and (4) Taxpayer funding and its recovery. Some of the key points raised in the report include:

• Supplies to all Bulb’s 1.5million customers were protected throughout the special administration and the sale, fulfilling one of the main objectives of the process (see paragraph 2.4).
• Teneo have forecasted that the shortfall to the taxpayer (i.e. the difference between taxpayer funding provided and amounts recoverable from Octopus) will be £246million (albeit DESNZ (the successor to BEIS in relation to Energy matters) may decide to recover this amount via consumer energy bills) (see Figure 13 (on p.50) in the report).
• The potentially risky decision by the special administrators not to hedge Bulb’s wholesale energy costs (a decision which was taken at the direction of BEIS and the Treasury in line with the Treasury’s Managing Public Money guidance but against partially conflicting advice from OFGEM – see paragraphs 2.13 – 2.16) had a favourable outcome and reduced the overall cost to the taxpayer.
• The total professional fees for all advisers (i.e. those of the administrators, their advisers and the advisers appointed by BEIS) is estimated at £52.7m.

Perhaps the most interesting section of the report is that which addresses the sale to Octopus. For those of us not directly involved in that transaction, the report provides a window on the transaction as a whole and the funding structures deployed to deliver it (including the funding provided to the Octopus buying entity to enable it to build up sufficient cash collateral post-completion (see paragraph 3.19)).

There is a helpful graphic showing the transaction timeline at Figure 8 (on p.36) of the report. The February 2022 – December 2022 timetable seems reasonably quick, given (i) the market conditions at the time (i.e. the significant price volatility and regulatory uncertainty), (ii) the size and complexity of the transaction and (iii) the legal challenge (launched by British Gas, Scottish Power and E.ON) to the associated Energy Transfer Scheme.