Business
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.
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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.