Octopus Energy sparks £1.5bn profit for UK from Bulb rescue
The energy supplier which rescued rival Bulb after its collapse in 2021 has repaid the final tranche of government support provided to secure the deal, delivering what it will say this week amounted to an unexpected £1.5bn profit for taxpayers.
Sky News has learnt that Octopus Energy will announce on Thursday it has paid more than £3bn to the government, including more than £40m which has accrued under a profit-share agreement struck between the company and Whitehall two years ago.
Industry sources said the announcement would mean that Octopus Energy – now the UK’s second-largest gas and electricity retailer behind British Gas – had repaid the entirety of the state support it received as part of the deal.
One insider said that although the government had spent more than £1.6bn on dealing with the Bulb crisis, the fall in wholesale energy prices had generated a fortuitous windfall for the public purse owing to a hedging arrangement which had been established at the time of the transaction.
Figures to be published on Thursday are expected to show that the company repaid £1.85bn to the government under that wholesale agreement.
It has also made about £200m in interest payments to the Treasury, as well as an initial £19m under the profit-sharing deal.
A further £20m or more of profit is to be paid to the government shortly, according to one source.
In total, Octopus Energy is expected to say that it has paid £3.16bn to the Treasury, generating £1.53bn in profit for the government.
At one stage, forecasts suggested that the bailout of Bulb, which had about 1.5m customers when it collapsed, might cost taxpayers more than £6bn to deal with as wholesale energy prices spiked at around the time of Vladimir Putin’s invasion of Ukraine.
Read more from Sky News:
Treasury on track to complete NatWest sell-off
New review into water industry launched
Keep up with all the latest news from the UK and around the world by following Sky News
The sale of Bulb drew interest from a number of larger players, some of which resorted to legal action after complaining that Octopus Energy had received an unfair state subsidy.
Bulb was the first company to be put into a so-called special administration regime (SAR), which meant it had been temporarily nationalised.
News that the final chunk of funding has been repaid and the suggestion of a £1.5bn profit for taxpayers comes as Britain’s biggest water company, Thames Water, teeters on the brink of a similar SAR-style rescue.
Octopus Energy, which has become one of Britain’s most valuable private companies through a succession of primary and secondary share sales, declined to comment on Wednesday.
Donald Trump’s victory was secured on an unequivocal promise to stretched American households that he would “end inflation”, but markets and economists are anticipating his second term will do the opposite.
A combination of corporate tax cuts, government borrowing, lower migration and swingeing tariffs on overseas imports are all expected to heat up the American economy and stoke price rises.
Bond yields on 10-year US Treasuries, effectively the price of borrowing for the American government, were up by 3.6% overnight, rising more than 15 basis points to above 4.4% as European markets opened.
That signals investors believe that borrowing will rise, and the Federal Reserve will be forced to slow rate cuts in order to tackle inflation.
US election latest: Trump beats Kamala Harris in race to White House
Money latest: The market winners and losers after Trump’s win
A clearer picture will emerge on Thursday when Federal Reserve chairman Jay Powell, who Mr Trump said will not be reappointed, announces the next move on rates.
Markets still expected a 0.25 percentage point cut (a similar move to that anticipated from the Bank of England earlier in the day) but Mr Powell’s comments will be scrutinised for signals of what Trump 2.0 means for the prospect of further cuts.
Please use Chrome browser for a more accessible video player
Trump wins: Demographics and key issues
But higher prices for consumers are not necessarily bad news for corporate America, with the dollar surging against sterling and the euro as swing states fell to Mr Trump, and Wall Street futures trading indicating a rally when they reopen with him confirmed as president-elect.
Shares in US banks were boosted with J.P. Morgan, Goldman Sachs and Morgan Stanley all up more than 6% in pre-market trading, along with Tesla, boosted by more than 13% as markets anticipate a dividend for Elon Musk’s campaign-trail support.
Keep up with all the latest news from the UK and around the world by following Sky News
Defence stocks were higher too and not just in the US – BAE Systems and Rolls Royce were both up – reflecting likely pressure on America’s NATO allies to make good on their commitments to increase spending.
Bitcoin was also positive in anticipation of a more benign regulatory environment from a president who used the campaign platform to launch his own cryptocurrency.
By contrast renewable holdings, the target of much of Joe Biden’s economic stimulus, were in negative territory, with wind and solar priorities likely to be replaced by a pledge to “drill baby, drill”.
Of most concern to America’s trading partners and allies will be Mr Trump’s promise to erect barriers to free trade.
The man who said tariffs “is the most beautiful word in the world” has pledged a 60% levy on Chinese imports and 10% on those from elsewhere, a deeply protectionist move that could trigger a trade war with China and the EU.
These can only increase prices in the US, with importers paying the levies at the point of entry, and other trading blocs likely to respond in kind.
Read more on Trump’s victory:
How worried should we be about Trump’s second presidency?
Dollar surges amid Trump victory
The EU has already imposed its own 35% tariff on Chinese EVs to the dismay of the continent’s carmakers the measure is intended to protect.
While these tensions play out, post-Brexit Britain, a relatively small player outside the major trading blocs, is likely to be a spectator.
Post Office campaigner Sir Alan Bates is yet to receive a reply from Sir Keir Starmer, despite writing to him over a month ago.
Sir Alan said he had written to the prime minister to remind him the “clock is still ticking” on a financial redress deadline for victims.
In his letter, he demanded a March 2025 deadline for compensation for sub-postmaster victims of the Horizon scandal.
Sir Alan confirmed to Sky News he was yet to hear back from the prime minister.
Keep up with all the latest news from the UK and around the world by following Sky News
“It was over a month ago,” he said.
“I sent him a reminder yesterday. I told him the clock is still ticking and it’s now five months from the March deadline, which I’m told is still achievable by other professionals.
“So let’s get on with it, that’s all we want. Get on with it.”
This breaking news story is being updated and more details will be published shortly.
Please refresh the page for the fullest version.
You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow @SkyNews on X or subscribe to our YouTube channel to keep up with the latest news.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway