Recommendation 9

In October 2022, Ofgem reviewed the proposed sale deal to assess whether Octopus had suitable financial and operational capabilities to ensure consumers’ interests were protected. As part of its review, Ofgem concluded that there was a risk that Octopus’s systems and processes were not robust enough to handle the scale of new customers. It also identified risks around Octopus’s low levels of investor support and rapid growth which had meant that it had a weaker financial position compared with other large suppliers. It concluded that while Octopus could manage the operational risks identified, the financial risks were more difficult to assess. We therefore asked Ofgem whether it had sufficient information on the financial suitability of Octopus. Ofgem told us that it had examined key areas of the Octopus business, including whether the company could cope with the operational changes of taking on Bulb, such as having sufficient capacity within its systems and processes to handle the scale of the new customers. Ofgem told us that it still had questions about whether Octopus could cope operationally but said that it was subject to ongoing monitoring. Ofgem told us that while the sale posed some risks, its view was that there would inevitably be risks with almost any transaction within the current energy market. It explained that it was continuing to monitor the financial performance of the company and Octopus’s progress to be in a more financially resilient position, and that “we are satisfied with what we are seeing”.13 We similarly asked Octopus how it would ensure that the temporary taxpayer funding was repaid and the risks surrounding this. Octopus told us that the ringfencing of Bulb meant that any profit and cash generated would remain in Bulb. Octopus also explained that, in the event of any losses and Bulb needing funding, it was for the Octopus Energy Group to fund it. We asked Octopus how the wider Octopus Energy Group was performing. Octopus responded that i