RUTH SUNDERLAND: Shine light on energy firms

The privatized 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 that are responsible for nearly ten million domestic consumers. Ovo, founded in 2009, supplies energy to 4.5 million households. Octopus, founded seven years ago, has 3.5 million. Another 5 feet is about to come aboard after rival Bulb’s rescue takeover over the weekend.

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

Taxpayers are still on the hook, basically holding back Octopus from purchasing Bulb as the state pays for hedging in the winter. Octopus and Ovo are private companies and therefore not required to disclose as much information as taxpayers or customers would like.

This is unsatisfactory. Both benefit from the drive of regulators and governments to bring new entrants into the energy market in the name of competition.

Longtime operators were rightly mocked for their appalling customer service, high bills and addiction to fossil fuels. Newcomers, on the other hand, hailed themselves as tech-savvy, trendy and greener.

The idea that the challengers would deliver better service and cheaper bills didn’t materialize as planned: Bulb was just the biggest in a wave of bankruptcies of companies too weak to withstand the recent crisis.

However, they have been very lucrative for the people behind them.

Wood and Gudka each raised £4 million from Bulb in a fundraiser in 2018.

Jackson’s stake in Octopus was valued at £260 million this summer, but to be fair, he is paying his £150,000 salary to the staff welfare fund.

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

All we know about this unusual loan is that it settled through a share buyback during the year and Fitzpatrick owns 100 percent of the share capital.

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

The former City trader, whose other business interests are a Cayman-registered vertical taxi company, has an enviable lifestyle and is said to have taken £2million from Ovo in 2013 to pay for a Cotswolds townhouse.

This type of business is not limited to the energy sector.

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

In a plc, executive pay is closely monitored and voted by shareholders. In a private company, it is much easier for bosses to treat the company like a fief.

Founders, especially if they have large or controlling interests, have enormous power.

There is nothing inherently wrong with a privately owned model. But any entrepreneur in an industry as vital as energy must be held to the highest standards of transparency and accountability.