The government bailout of failed supplier Bulb could end up cost neutral.
The government is expected to recover all the money it invested and potentially even make a profit from the deal, the budget watchdog has confirmed.
Octopus Energy has taken over Bulb after the bailout, in a deal which the Office of Budget Responsibility (OBR) now says could end up evened out for the tax payer.
The Office of Budget Responsibility (OBR) said: “In our November forecast we included a total of £6.5 billion in capital transfers from government under these two facilities: £2.0 billion for the first facility (split roughly evenly across 2021-22 and 2022-23) and £4.5 billion for the second facility. In this forecast we have revised both estimates down.”
The OBR estimated the total gross payments to the Bulb special administration regime (SAR) to be £3 billion due to falling wholesale energy prices.
With Octopus repaying £3 billion, that could mean that profit might emerge for the public finances.
The government has spent money to purchase energy – this will then be sold to the former Bulb customers at prices close to the Ofgem price cap.
The proceeds from these sales will ultimately be returned to the government at some point between September 2024 and September 2025.
The OBR stated: “It is possible that government will recoup its outgoings via this payment – indeed Octopus is quoted as stating this will result in a profit for government of around £1.2 billion.
“This would mean the government essentially breaks even across both financing facilities. And the government has stated its intention that Bulb SAR will ultimately be fiscally neutral.”
ELN has approached Octopus for comment.