Recommendation 8

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