Scottish Power has hit out at ministers’ handling of the sale of nationalized utility Bulb, accusing them of “misrepresentations”[ing] competition’ in the retail energy sector.

Sky News has obtained a letter sent by Keith Anderson, chief executive of the Spanish-owned supplier, to Jacob Rees-Mogg, the business secretary, effectively calling for the Bulb auction to be scrapped and reopened.

Mr Anderson’s demand comes days after Sky News revealed rival Ovo Energy was trying to derail the sale of Bulb, which looked set to culminate in a takeover of Octopus Energy in the coming weeks.

Industry sources said on Monday that both Ovo and Scottish Power were concerned that Octopus Energy would benefit from £1bn of temporary taxpayer funding.

In his letter to Mr Rees-Mogg, Mr Anderson wrote that the funding was “unfair” because “no other supplier in the UK has access to this kind of government funding and … in the current environment we believe that other suppliers will want to buy Bulb for a significantly lower level of state support.”

Mr Anderson did not say outright that Scottish Power would be interested in buying Bulb’s 1.6 million customer base in its entirety, although energy executives believe it would be strongly interested in taking on a significant portion of Bulb’s customers.

In his letter, he said any funding provided to Octopus Energy would give it a “commercial advantage over other UK energy providers”.

“This, in turn, can lead to distortion of competition in the energy supply market,” he added.

“This is unfair to other energy suppliers such as Scottish Power and not in the public interest.”

“Procedural Injustice”

Mr Anderson also claimed “procedural unfairness” in the Bulb auction, saying the original bid deadline was set before the government decided to intervene in the market with schemes such as the multibillion-dollar Energy Price Guarantee and Energy Bill Support Scheme. .

“Furthermore, at the time tenders were invited, no government support was offered to potential bidders.

“These prerequisites informed the approach that potential bidders such as Scottish Power took in deciding whether or not to bid for Bulb.”

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One source suggested that Mr Anderson’s reference to “procedural unfairness” could hint at a potential legal case against the government in the form of a possible judicial review.

Scottish Power declined to comment on the letter.

Hoping for a deal with Octopus within weeks

A government spokesman said: “By law, Bulb’s special administrators are required to keep costs as low as possible.

“We continue to work closely with them to ensure we get the best value for the taxpayer.”

Further details of Ovo’s interest in Bulb remain unclear.

Ministers are said to hope to seal a deal with Octopus within weeks.

If successful, the combination of Ovo and Bulb would have about 5.5 million household customers — a size that could draw scrutiny from competition regulators, according to one analyst.

A £4 billion bailout

A taxpayer bailout of Bulb will cost the government £4bn, Sky News recently revealed, and that figure includes £1bn of interim funding provided as part of the sale of Octopus.

The latest attempt to derail the Octopus deal comes amid extreme turmoil in UK energy markets.

The government has already been forced to spend billions of pounds buying gas for Bulb customers because the company did not hedge its purchases to fix cost.

Over the past year, wholesale gas prices have risen sharply, with Vladimir Putin’s invasion of Ukraine having a particularly strong impact on global energy markets.

Chancellor Jeremy Hunt announced this month that a huge package of subsidies for consumers’ electricity bills will be cut, but it is expected to cost many billions of pounds.

Octopus is believed to have struck a deal that saw it pay between £100m and £200m to attract Bulb’s customer base, with a separate profit-share agreement giving the government several years of returns from Bulb customers.

Bulb’s collapse in November 2021 was the most significant of dozens of supplier failures, with Ofgem, the industry regulator, facing heavy criticism for its approach to licensing new market entrants.

It was unclear on Monday whether negotiations to sell Bulb would be further complicated by the emergence of Rishi Sunak as the new prime minister.