Octopus to repay £3bn in costs related to Bulb acquisition

Octopus Energy has confirmed it will repay the entire £3 billion in government loans it received to acquire Bulb’s customer base.

The company, which acquired Bulb’s 1.5 million customers in 2022, said it will repay the loan in full by September this year.

The sum is considerably less than the £6.5 billion the Office for Budget Responsibility estimated the cost to taxpayers of Bulb’s failure would be.

Greg Jackson, founder and chief executive of Octopus Energy, said the 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,” he added.

Following Octopus’ repayment, Bulb’s joint energy administrators (JEA) estimate the outstanding amount of other related costs is around £6.1 million.

This figure, said permanent secretary for energy security and net zero Jeremy Pocklington, “represents an approximately 99% plus recovery of amounts owed to HMG”.

In a letter written last month, Pocklington told the chair of the Public Accounts Committee Meg Hillier: “This is a significant decrease from the £19.6 million figure cited in February and is due to refinements in the JEAs’ forecasts as remaining issues are settled, and there is more clarity around future cash flows.

“As highlighted previously, there are still a number of uncertainties to work through and the final quantum of any shortfall will not be known until the end of the SAR period in 2025.”

Octopus acquired Bulb’s customers after the latter was quasi-nationalised by government and became the first retailer to be put through the SAR in 2021.

The migration of all 1.5 million Bulb customers onto Octopus’ systems was completed in what the company said was “record time” last summer.

The retailer began migrating the customers on 23 December 2022, two days after the official completion date of the Bulb acquisition. Furthermore, all of Bulb’s employees were offered roles at Octopus, with the vast majority (94%) choosing to stay.

Yet the government’s decision to allow Octopus to acquire Bulb’s customer base caused controversy and a legal challenge against the government was brought by British Gas, Eon and Scottish Power.

The hearing challenged the decision on the grounds that Octopus was offered different terms to other suitors for the nationalised energy supplier and that the secretary of state could have secured a better deal.

British Gas owner Centrica said it was subject to “discrimination” in the bidding process and in documents submitted to the court, Centrica argued that the decision was “arrived at by an unlawful and unfair process”.

The government hit back at these claims however, saying allegations made by rival suppliers were all “without merit”.

High Court Lord Justice Singh and Mr Justice Foxton rejected the suppliers’ claim for a judicial review on the grounds that they took too long to lodge their claim.

The ruling added that even if the suppliers had acted earlier, the case would have still been rejected.