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The UK government has secured a £1.5 billion profit following Octopus Energy’s takeover of bankrupt energy supplier Bulb, drawing a conclusion to the Bulb rescue saga. Octopus Energy paid more than £3 billion to the government, providing a significant financial boost amid pressing budget constraints.
The government intervened in November 2021 when Bulb came under administration. A year later, Bulb was sold to Octopus Energy in a groundbreaking deal that has proven highly beneficial to both taxpayers and bill payers.
A deal that helped taxpayers
As part of the agreement, a wholesale agreement was entered into to cover costs for Bulb’s customers so that energy prices would not burden taxpayers or bill payers during the transition period. In addition, the deal included a profit-sharing mechanism until Octopus fully repaid the hedging funds.
On 30 September 2024, Octopus made its final payment, completing the deal without any loss to the public finances, a much better result than initial cost forecasts of £6.5 billion.
The government’s profits from the deal included £1.28 billion from the wholesale scheme, which benefited from falls in energy prices, £19 million from the profit-sharing mechanism and £200 million in interest. A further £20 million is expected from the profit-sharing deal.
No additional costs for bill payers
Unlike many other business bankruptcies, this agreement did not impose additional costs on energy customers through higher fixed charges. Octopus also guaranteed jobs for all Bulb employees, with 94% choosing to stay, and seamlessly transitioned Bulb’s 1.5 million customers to its systems within six months.
Greg Jackson, founder of Octopus Energy, praised the outcome: “This outcome is a remarkable success story for taxpayers and bill payers. Octopus worked hard to find a fair deal that saved the Treasury billions compared to alternatives.”