Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Acknowledged
Estimated repayment from Octopus decreasing, subject to volatile wholesale energy market conditions.
Conclusion
The NAO reported that the estimated amount Octopus was expected to pay back was £2.96 billion, based on the wholesale cost allowance in Ofgem’s price cap methodology. This included the one-off payment of £1.06 billion made by BEIS on 20 December, and the £0.71 billion estimated wholesale costs of energy for Bulb customers bought by BEIS and the Department between December 2022 and March 2023.10 However, Teneo told us that its latest estimate, as of 25 May 2023, was that the amount to be repaid by Octopus was closer to £2.8 billion due to the fall in the cost of wholesale energy prices. Octopus is expected to repay this money in September 2024. There are deferral triggers if the market conditions worsen, which may result in the repayment being deferred by twelve months to September 2025.11 Ofgem explained that it was difficult to predict where the gas market will be with any certainty as every projection so far had proved to be incorrect. Ofgem told us that while prices had been coming down for some time now, prices were still susceptible to drastic change in the event of increased demand or another energy crisis.12
Government Response Summary
The government acknowledges the estimated repayment of £2.8 billion by Octopus, expected by September 2024 with a potential deferral to September 2025. It further states that it does not expect full recovery and intends to recover any shortfall from energy consumers, with the final cost to be calculated at the SAR's conclusion.
Government Response
Acknowledged
HM Government
Acknowledged
On 25 May 2023, Teneo reported that the estimated amount Octopus would be due to repay to government was £2.8 billion. This is currently expected to be repaid by September 2024, but government and Octopus have agreed some conditions under which the repayment could be deferred to September 2025. Government does not expect to recover the full amount of taxpayer funding committed to Bulb and has indicated that it intends to recover the shortfall from energy consumers. The Department will calculate the final cost to the taxpayer when the SAR ends.