Octopus Energy Finalizes Bulb Takeover with £3 Billion Government Repayment

Image: Octopus Energy founder Greg Jackson and Chancellor Rachel Reeves MP Credit: Octopus Energy Group

Octopus Energy, the energy firm that stepped in to rescue its competitor Bulb after its 2021 collapse, has completed the repayment of the final portion of government support that facilitated the acquisition, delivering an unexpected £1.5 billion profit for UK taxpayers. This significant financial development will be formally announced on Thursday, revealing that Octopus Energy has returned over £3 billion to the government. This sum includes over £40 million from a profit-sharing agreement initiated with Whitehall two years ago.

Industry insiders indicate that this announcement marks the full repayment of state aid received during the Bulb rescue operation, positioning Octopus Energy as the UK's second-largest energy retailer after British Gas. Notably, the government had initially invested more than £1.6 billion to manage the Bulb crisis. However, a decrease in wholesale energy prices and a strategic hedging approach during the transaction resulted in a lucrative gain for the public finances.

Detailed figures set to be released on Thursday will demonstrate that the company has repaid £1.85 billion under the wholesale agreement alone, alongside approximately £200 million in interest to the Treasury and an initial £19 million from the profit-share arrangement. An additional £20 million in profits is expected to be transferred to the government soon.

Octopus Energy is projected to report a contribution of £3.16 billion to the Treasury, thereby generating a £1.53 billion profit for the government. This outcome significantly contrasts with earlier forecasts that predicted the Bulb bailout might cost taxpayers upwards of £6 billion, especially as global energy prices surged following geopolitical events like Vladimir Putin's invasion of Ukraine.

The transaction drew attention and sparked litigation from several major industry players, who argued that Octopus Energy had benefited from unfair government support. Bulb was notably the first company to enter a special administration regime (SAR), effectively placing it under temporary nationalization.

As this chapter closes with the repayment of funds and substantial profits returned to taxpayers, another critical situation unfolds with Thames Water approaching a potential SAR-style intervention. Meanwhile, Octopus Energy, which has ascended to become one of the UK's most valuable private firms through various share sales, has opted not to comment on these developments as of Wednesday.