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Octopus Energy to repay £3bn of taxpayer money used for Bulb takeover

Pa
Saturday, Jun 22, 2024

LONDON: Octopus Energy will pay the Government nearly £3 billion to reimburse the public money it received to take over collapsed energy supplier Bulb.

The repayment will see the next Government get an early windfall, with the payment promised by September, and it means almost all of the costs of temporarily nationalising Bulb in 2021 will have been recovered by the public purse.

Bulb collapsed in 2021 after wholesale prices surged above the price cap set by regulator Ofgem, meaning suppliers were forced to sell energy at a loss.The Government took temporary control to keep the lights on for Bulb’s 1.5 million customers under a new process called a special administration regime (SAR).

In late 2022, the Government sold Bulb’s customers to Octopus. It provided more than £1.6 billion in temporary taxpayer support to cover the energy needed to supply those customers.The nearly £3 billion repayment, confirmed on Friday, was part of the terms, based on estimated future costs.

The repayment was first reported by the Financial Times.The fact that the price of energy has now fallen means the Government makes a profit of nearly £1.3 billion on the deal, which in turn covers all but £6 million, about 99%, of the total costs associated with temporarily nationalising Bulb.

When the Government sold Bulb to Octopus, the energy supplier’s rivals including ScottishPower, British Gas and E.On brought a legal challenge against the deal, calling it an “unfair sale process”. The high court rejected the challenge.

Late last year, Octopus became Britain’s biggest energy supplier, exceeding British Gas when it added 1.3 million customers by buying Shell Energy.

Greg Jackson, founder of Octopus, 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.”