RUTH SUNDERLAND: Shine light on energy firms

RUTH SUNDERLAND: Shine light on energy firms – any entrepreneur in such a vital sector should be held to highest standards of accountability

  • Idea challengers would bring better service has not turned out as planned 
  • Bulb was the biggest in a wave of failures of firms 
  • Privatised energy industry has been fertile ground for ambitious entrepreneurs

The privatised energy industry has been fertile ground for ambitious entrepreneurs such as Stephen Fitzpatrick, 45, the founder of Ovo Group, and Greg Jackson, 51, the man behind Octopus. 

These businessmen are at the helm of private companies which are responsible for almost ten million domestic consumers. Ovo, founded in 2009, supplies energy to 4.5m households. Octopus, set up seven years ago, has 3.5m. Another 1.5m are about to come on board following its rescue takeover of rival Bulb over the weekend. 

Bulb is an example of the energy companies that sprang up like mushrooms. Founded in 2015 by Hayden Wood, 39, and Amit Gudka, 38, it collapsed last year in a debacle that has cost taxpayers billions. 

Too weak to cope: The idea challengers would bring about better service and cheaper bills has not turned out as planned

Taxpayers are still on the hook and are in effect backstopping Octopus in its purchase of Bulb, as the state is paying for hedging over the winter. Octopus and Ovo are private companies and therefore not obliged to disclose as much information as taxpayers or customers might like. 

This is unsatisfactory. Both are beneficiaries of a drive by regulators and governments to bring new entrants into the energy market in the name of competition. 

Old-style operators were, rightly, derided for their execrable customer service, high bills and addiction to fossil fuels. Newbies, by contrast, vaunted themselves as tech savvy, trendier and greener. 

The idea challengers would bring about better service and cheaper bills has not turned out as planned: Bulb was merely the biggest in a wave of failures of firms too weak to cope with the recent crisis. 

They have, though, been highly lucrative for the people behind them. 

Wood and Gudka took out £4m apiece from Bulb in a fund-raising in 2018. 

Jackson’s stake in Octopus was valued at an estimated £260m this summer, though to be fair, he does pay his £150,000 salary into the staff welfare fund.

As for Fitzpatrick, The Mail on Sunday reported on a £27m loan made by Ovo’s parent company Imagination Industries in 2021 to ‘directors’ – himself and his colleague Vincent Casey. 

All we know about this unusual loan is that it was settled during the year through a repurchase of shares and that Fitzpatrick owns 100 per cent of the share capital. 

No information is forthcoming about the purpose of the loan, its duration, any interest charged and whether all of it went to Fitzpatrick. We are also in the dark over the procedures for independently valuing the shares used to settle it. 

The former City trader, whose other business interests include a Cayman Islands-registered vertical taxi company, has an enviable lifestyle and was reported to have taken out £2m from Ovo in 2013 to pay for a Cotswolds mansion. 

This type of thing is not confined to the energy sector. 

In a separate episode, auditors at another private company, EG Group, flagged up multi-million pound loans to the Issa brothers, who also own the Asda supermarket chain, to buy Bombardier jets. 

In a plc, executive rewards are closely scrutinised and put to a shareholder vote. It is far easier in a private company for bosses to treat the business as a fiefdom. 

Founders, particularly if they have large or controlling stakes, have huge power. 

There is nothing intrinsically wrong with a private ownership model. But any entrepreneur in a sector as vital as energy should be held to the highest standards of transparency and accountability.



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