Octopus Energy has announced that it has signed a deal to complete the purchase of rival energy firm Shell Energy UK. The move will affect approximately two million UK households. Here we explain what you need to know.

The deal, which is expected to be completed in the final quarter of 2023, will see Octopus Energy grow its total customer base to 6.5 million. This will make Octopus Energy the UK’s second-largest energy provider behind British Gas.

For now, Shell Energy customers should sit tight and wait for Octopus Energy to contact them towards the end of the year, the supplier has said. It has promised there will be no disruption to customers’ energy supply.

Right now, the vast majority of customers are covered by the energy price cap which means bills are capped at an average of £1,923 a year.

Read more: What is the new energy price cap?

What Shell Energy’s sale means for households

In a statement, Octopus Energy has said it expects to complete the deal between October and December. However, any potential purchase will first need to be approved by the regulator, Ofgem.

Shell Energy customers will be moved over through a migration process following the completion of the deal. For now, customers do not need to take any action, and will be contacted in the coming months.

Under Ofgem’s rules, households must continue to receive energy as normal during a change of supplier. Typically, your account will be moved including any debts you owe or credit you’ve built-up.

Both Octopus Energy and Shell Energy have reassured customers that their gas and electricity supplies will not be affected during this period.

“Customer credit balances are protected, and will automatically get transferred to their new account with Octopus together with their existing direct debits,” a spokesperson from Octopus said.

It is unclear how long it will take for all Shell Energy customers to be migrated to Octopus’ services. However, Octopus recently completed the acquisition of another rival, Bulb. All of Bulb’s 1.5 million customers were successfully migrated within six months, which Octopus notes is an industry record.

The vast majority of Shell customers are likely to be on the supplier’s standard variable tariff. This is currently controlled by the energy price guarantee and so rates won’t be affected.

Fixed contracts should continue as normal. Currently, there are some fixed tariffs cheaper than the price cap, including one from Octopus Energy. However, this doesn’t mean you should necessarily switch to it, as it could cost you more in the long run. Find out more about if it’s worth switching to a fixed energy deal.

Will Shell’s broadband customers be affected?

Shell, which is headquartered just outside Coventry, also has around 500,000 broadband users. These customers will also be migrated to Octopus’ own broadband service.

Octopus Energy has said that it will contact broadband customers regarding the migration of their accounts following the completion of the deal.

Under Ofcom broadband rules, a loss of service during a switchover should not last longer than one working day. Customers who are disconnected should also be automatically compensated.

A Shell Energy statement said: “We would anticipate that any customers on a fixed term contract, either for broadband or energy, will see those terms honoured throughout any transfer of ownership.” 

Read more: £130million worth of energy support vouchers still unclaimed

What Shell says

Shell launched its home energy arm after acquiring First Utility in 2018. A year later it rebranded the business to Shell Energy Retail.

It took over the Post Office’s broadband customers in 2021 and now offers three broadband tariffs.

“As we stated at the end of January, we have been conducting a strategic review of our home energy retail businesses in the UK, the Netherlands and Germany,” a Shell statement said.

“That review has now concluded and as a consequence, we intend to exit those businesses.

“A sales process is already under way, with the intent to reach an agreement with a potential buyer in the coming months.

“We are committed to supporting both customers and staff and protecting customer interests during this period.”