Octopus to repay £3bn of Bulb nationalisation costs after supplier’s collapse
Octopus Energy will pay the UK government an early £3bn windfall after the company promised to reimburse all the public funds it received to take over the collapsed energy supplier Bulb.
The energy supplier said it will reimburse the Treasury by September, which means that the government will almost full recouped the cost of temporarily nationalising Bulb in 2021.
Bulb was the biggest of more than 30 energy firms to collapse last winter, after a surge in wholesale gas prices triggered a wave of supplier failures.
An unsuccessful rescue attempt resulted in it being left in the hands of the government.
At the time the cost of Bulb’s administration was expected to be the biggest government bailout since the rescue of RBS in 2008 during the financial crisis, initially estimated at as much as £6bn.
Nearly a year later, the government agreed to sell Bulb to Octopus in a deal that involved a package of temporary taxpayer-funded measures – a special administration regime (SAR) – to buy the energy for Bulb’s customers. That deal was due to end this year or be extended until 2025.
Falling energy prices have since slashed the final bill, with Bulb’s administrators Teneo forecasting the figure has dropped to £3.02bn.
This means not only does the government expect to recover the £1.63bn it spent on energy for Bulb customers but also to make a profit of almost £1.3bn through the deal with Octopus, which it can use to recover all but £6m of the cost of the SAR.
Octopus, which became the largest electricity supplier in the UK, with 6.9mn customers, as a result of the takeover, told the Financial Times: “The deal the government agreed with Octopus was fair for everyone and struck good value for taxpayers. We have already started to repay the government and it should all be complete by September.”