Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Require Department to report on SAR lessons learned for taxpayer funding recovery and final Bulb costs.
Conclusion
We are concerned that substantive risks and uncertainties remain to the recovery of the £3.02 billion of taxpayer funds currently committed to the funding of Bulb Energy. The government provided a package of temporary taxpayer funding to enable Octopus to complete the acquisition of Bulb via the Energy Transfer Scheme. Octopus is required to repay the taxpayer funding along with the accompanying interest applied to it. Teneo’s most recent estimate is that Octopus is expected to repay £2.8 billion to the government by September 2024. But this could be deferred to September 2025 if wholesale energy market conditions worsen. Prior to the government’s approval of the Energy Transfer Scheme, Ofgem identified risks around Octopus’s low levels of investor support and its over-reliance on customer credit balances for cash to fund its businesses activities. Octopus’s financial risks were difficult to assess as a result of its rapid growth which had left the business in a weaker financial position compared to other large suppliers. To mitigate these risks and to protect the taxpayer from potential loss of value from its investment, Bulb has been placed in a legal ringfence within the Octopus group until taxpayer funding is repaid. The final amount to be repaid, and therefore, the final cost to the taxpayer, will not be known until the SAR ends. Recommendation 3a: Within 12 months, the Department should write to the Committee with details of what lessons it has learnt from the SAR and how it is using these to monitor and ensure the successful recovery of temporary taxpayer funding. b) At the conclusion of the Bulb SAR, the Department should write to the Committee with details of the final cost to the taxpayer, including how much has been repaid by Octopus and any shortfall that it plans to recover from consumers.
Government Response Summary
The government agrees and clarifies that the Bulb Special Administration Regime (SAR) will conclude in autumn 2025 or 2026, when final costs and repayment details will be known. The department commits to providing a written update on estimated outturns and timelines by the end of December 2025, with interim updates.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee's recommendation. their statutory duties, have submitted their final progress report and a court application to end the SAR, with Secretary of State’ consent, has been made and duly ordered by the court. Full repayment is not expected until September 2024 (or 2025 if Octopus exercise their right to defer if certain market conditions are met). Following this, a further 12-month wind- down period is expected for the administrators to close any remaining matters. As such the conclusion of the SAR will not occur until sometime in autumn of 2025 or autumn of 2026 at which point, we will have details of the final costs to the taxpayer and how much has been repaid. The recovery of any shortfall is dependent on final amounts calculated by the administrators which is still progressing. The department will inform the Committee once it has the final confirmed amounts and expects to provide a written update as to estimated outturns and timelines by end of December 2025. However, in the meantime it will keep the Committee updated of estimated outturns over the remaining SAR period.