Weekly News Review - 7th November 2022
Octopus Energy to take over collapsed supplier Bulb
Energy supplier Octopus Energy is set to buy its former competitor Bulb, which collapsed last November amid rising gas and electricity prices and has since been run by the government. The sale is expected to be completed this month, following a court hearing on the administration process.
The deal may involve the UK paying Octopus to cover the costs of Bulb, after the supplier reportedly asked the government for £1 billion to cover costs incurred from volatile energy prices. In comparison, Ovo Group had prepared a bid for Bulb which wouldn’t require government money to support it.
There is no change to either Bulb or Octopus customers’ supply arrangements, and Bulb customers have been told their credit balances will automatically get transferred to their new account with Octopus, along with their existing direct debits.
With already more than 2 million customers, Octopus will become the UK’s third largest energy supplier after adding Bulb’s 1.5 million households. The combined numbers would give Octopus a 16% share of domestic energy accounts, behind British Gas (24%) and E.ON (also 16%).
Business Secretary Grant Shapps said the sale “will bring vital reassurance and energy security to consumers across the country at a time when they need it most. This is a fresh start and means Bulb’s 1.5 million customers can rest easy, knowing they have a new energy home in Octopus.”
Greg Jackson, the founder and chief executive of Octopus Energy Group, said: “We take our responsibilities very seriously. We will work unbelievably hard to deliver value for taxpayers and to look after Bulb’s staff and customers.
“We started off as rivals but shared the same mission – driving a greener, cheaper energy system with people at the heart. We know how important this is to Bulb’s loyal customers and dedicated staff, and are determined that Octopus can provide them with a stable home for the future.”
Rishi Sunak now set to attend COP27 climate summit
Rishi Sunak has reversed an earlier decision not to go to the COP27 climate summit in Egypt. The prime minister had initially said he was too busy preparing for the 17 November budget to attend the event which opens on Sunday. But this had been widely criticised by climate campaigners, opposition parties and climate adviser Alok Sharma.
Mr Sunak said on Twitter: “There is no long-term prosperity without action on climate change. There is no energy security without investing in renewables. That is why I will attend COP27 next week: to deliver on Glasgow’s legacy of building a secure and sustainable future.”
This follows news on Tuesday that former prime minister Boris Johnson would be attending the conference in Sharm El Sheikh. Johnson was prime minister when the UK hosted last year’s COP (Conference of the Parties) in Glasgow. The event was chaired by Alok Sharma who said he was “delighted” by the reversal of Sunak’s position, having previously said he was “disappointed” he was not planning to attend.
Parliament’s cross-party environment group had written to Sunak, calling on him to attend the summit in Egypt. The group said: “We hope that, as prime minister, you will use your power to support environmental politics which improve the economy whilst enhancing the environment at home and abroad. The decisions your government takes will have a noticeable impact on the lives of people across the country, and indeed our entire planet, for generations to come.”
Many world leaders including US President Joe Biden and France’s Emmanuel Macron are due to attend the UN event. However, King Charles will not be going despite speaking at COP26 in Glasgow and being a long-time champion of environmental causes. Downing Street said Liz Truss’s government had agreed with Buckingham Palace that it was not the “right occasion” for the King to attend – and this advice had not changed.
The annual climate summits are designed to help governments agree measures to limit rises in global temperatures. This year’s conference takes place from 6 to 18 November, finishing the day after Chancellor Jeremy Hunt is due to set out the government’s tax and spending plans.
BP and Shell see huge profits due to high oil and gas prices
BP has reported a huge profit for July to September due to high oil and gas prices following Russia’s invasion of Ukraine. The oil giant made $8.2bn (£7.1bn) for the period, more than double the profit over the same three months last year. BP said it will pay $800m in windfall tax this year, a levy on profits made from extracting UK oil and gas.
The windfall tax was introduced by Rishi Sunak when he was chancellor. It is expected there will be renewed calls for this windfall tax on energy firms to be increased following the big profit announcements. At the time Mr Sunak said the levy – which they have called an Energy Profits Levy – would raise £5bn in its first year.
Alok Sharma, UK’s COP president, tweeted: We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”
Treasury sources have indicated that, ahead of the Autumn Statement on 17 November, an extension to the windfall tax is being discussed which will detail plans for tax rises and spending cuts as the government attempts to fill a “black hole” in public finances.
That could include increasing the rate oil and energy companies have to pay on extraordinary profits, extending the timeframe it applies for or expanding it to include electricity generators. The Treasury has warned that everyone will need to pay more tax “in the years ahead”.
Last week, BP’s rival Shell revealed that it had paid no windfall tax in the UK because it had invested millions of pounds. But it said it expected to start paying the levy next year. Shell said global profits reached $9.5bn (£8.2bn) between July and September, compared to $4.2bn during the same period last year. However, because it had made large investments in the UK, it meant it had made no profit here.
While BP is set to pay some windfall tax, it will also give its shareholders a boost by increasing its dividend payment by 10%, and will also spend $2.5bn buying back shares.
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