Octopus Energy has paid over £3 billion to the UK Government following its acquisition of Bulb, successfully closing the chapter on the Bulb bailout saga.
This delivers a significant boost to government finances, generating a total profit of £1.5 billion at a time when budget constraints are pressing.
The government temporarily stepped in to support Bulb when the business went bust in November 2021. A year later, it sold Bulb to Octopus Energy in an unprecedented deal that has proven hugely beneficial to taxpayers and billpayers.
Under this innovative deal, a wholesale agreement was put in place to cover the costs needed to hedge for Bulb’s customers.
The deal with Octopus also included a profit-sharing arrangement that remained in place until the hedge money was fully paid by Octopus.
The final payment was made on the 30th September 2024, concluding the bailout without loss to taxpayers or billpayers – initial estimates had projected costs could total £6.5 billion*.
The biggest chunk of the profit – £1.28bn – came from the wholesale arrangement, which allowed the government to reap the benefits as energy prices fell during the hedging period.
The government also received a further £19 million from the profit-sharing mechanism and £200 million in interest and is expected to receive another £20 million from the profit-share agreement in due course.
The Octopus deal was not only good for taxpayers, but also didn’t impose additional costs on billpayers. Unlike other company failures, this agreement added nothing to standing charges.
Also, Octopus ensured that every Bulb employee was offered a job – an impressive 94% chose to stay – while seamlessly migrating Bulb’s 1.5 million customers onto its systems within six months, minimising disruption to customers.
Greg Jackson, Founder of Octopus Energy, commented: “This outcome is a remarkable success story for taxpayers and billpayers.
“I’m proud that when other companies walked away or banged their fists on the table, Octopus worked hard to find a fair deal which saved the Treasury billions compared to alternatives. I hope this is a model for future deals between government and companies.”
Image caption: Octopus Energy Founder Greg Jackson and Chancellor Rachel Reeves MP
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