Octopus to repay £3bn to taxpayers for Bulb rescue

Bulb had 1.5 million UK customers when it went bust.

It was placed into a so-called Special Administration Regime (SAR), where it was run by the government via Ofgem, the energy watchdog, for less than a year as it struggled to find a buyer.

When Octopus Energy stepped in to take over and add Bulb’s customers to its own, it struck a deal with the government which meant that it would help cover the costs of energy for the affected households to ensure supplies were not disrupted.

The energy was bought by the government and based on wholesale prices, cost £1.63bn.

Under the deal, it was agreed that Octopus Energy would repay the government in line with the level set by the energy price cap, which is decided by Ofgem.

As wholesale gas prices have continued to fall, where Octopus’s agreed repayment price has remained the same, government stands to not only recover the money spent, but make a profit of £1.28bn from the deal.

Greg Jackson, the founder and chief executive at of Octopus Energy, said: “This outcome is a great result for taxpayers.

“Octopus worked hard in the darkest depths of the energy crisis to create a fair deal, meaning that although Bulb went bust with billions of liabilities, it has cost the government almost nothing.”

Roughly £6.1m of other costs that the government has to pay in relation to the SAR remain outstanding, down from the £19.6m forecast as recently as February, according to a letter sent to the Public Accounts committee, external by the permanent secretary for energy security last month.

It means the government will recover more than 99% of the money lent to Octopus Energy.

There are still a number of “uncertainties” to work through though, the letter said, so the final numbers may still be subject to some change.

It has been reported that the SAR model may well be considered if Thames Water were to collapse under its debts.

The Treasury, Department for Environment and regulator Ofwat have been “wargaming” a situation which would see financial consultants run the company on the government’s behalf.