Octopus Energy is on course to reimburse the government close to £3 billion, fulfilling a commitment to return taxpayer money used in the rescue of its collapsed rival, Bulb.
This repayment means that the Treasury will recoup nearly the entire cost of the temporary nationalisation of Bulb that occurred in 2021.
Earlier projections had indicated that this could have been one of the government’s largest bailouts since the financial crisis.
However, a decline in wholesale energy prices has significantly reduced the expected final bill.
The Financial Times reports that Octopus has already commenced the repayment process, with completion anticipated by September.
There had been political concerns about the potential for additional costs being passed onto consumers, especially when many households are already under financial strain.
Bulb was one of several energy firms that went under a few years ago following a surge in wholesale gas prices, driven by the end of Covid restrictions and exacerbated by the war in Ukraine.
At the time of its collapse, Bulb served 1.5 million customers in the UK.
Following its collapse, Bulb was placed into a Special Administration Regime (SAR), during which it was managed by the government via Ofgem, the energy regulator, for less than a year as a buyer was sought.
Octopus Energy eventually took over, incorporating Bulb’s customers into its own operations.
As part of this deal, Octopus agreed to help cover the energy costs for affected households to prevent supply disruptions.
The energy was purchased by the government at a cost of £1.63 billion, based on wholesale prices.
Under the agreement, Octopus Energy is to repay the government according to the energy price cap set by Ofgem.
As wholesale gas prices have declined, Octopus’s fixed repayment price has remained stable, allowing the government not only to recover its expenditure but also to realise a profit of £1.28 billion from the arrangement.
Greg Jackson, Founder and Chief Executive of Octopus Energy, stated: “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.”
Energy Live News has contacted Octopus for comment.
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