Government support for Bulb Energy's wholesale energy costs ran to 31 March 2023, the date on which the failed supplier was expected to hold enough capital to pay for its own wholesale purchases from 1 April 20231. The arrangement was part of the sale deal under which Octopus Energy Limited bought Bulb, paying £113 million to the government on 20 December 20221.
Bulb announced it could no longer continue trading in November 20211. With around 1.5 million customers it was the largest supplier to fail and was judged too large for a Supplier of Last Resort, so on 24 November 2021 Ofgem and the Department for Energy Security and Net Zero placed it in a Special Administration Regime, with three individuals from Teneo appointed by the High Court as joint energy administrators1. A sale process launched in February 2022 and took 10 months to complete1.
As of the end of January 2023, the total estimated cost to the taxpayer of funding Bulb was £3.02 billion1. On 25 May 2023, Teneo reported that the estimated amount Octopus would be due to repay to government was £2.8 billion1. Government does not expect to recover the full amount committed and has indicated it intends to recover the shortfall from energy consumers1. The Department will calculate the final cost when the Special Administration Regime ends1.
The government's response to the Committee of Public Accounts sets out its position on the recovery of the money committed:
"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 same document records the wider context: average annual household bills for gas and electricity rose from £1,200 in winter 2021-22 to £3,300 in spring 2023, and between July 2021 and May 2022, 29 energy suppliers failed, affecting nearly four million households1.
| Item | Figure |
|---|---|
| Paid by Octopus to buy Bulb | £113 million |
| Estimated taxpayer cost of funding Bulb, end January 2023 | £3.02 billion |
| Estimated amount Octopus due to repay, reported 25 May 2023 | £2.8 billion |
Why it matters for households
The end of wholesale cost support marks the point at which Bulb's remaining liabilities stopped growing at the taxpayer's expense, but it does not close the episode. The government has said it does not expect to recover the full £3.02 billion and intends to recover the shortfall from energy consumers1, which means the cost of the collapse can still reach household bills through levies rather than general taxation. For a household, that is a charge that arrives regardless of which supplier it buys from, and it sits alongside the standing charges and unit rates that make up a bill. The episode is also the reference point for the financial resilience rules now being applied to suppliers, including capital adequacy requirements due to take effect from Q1 20251.
What happens next
Full repayment is not expected until September 2024, or September 2025 if Octopus exercises a right to defer under agreed market conditions1. A further 12-month wind-down period is then expected for the administrators to close remaining matters, so the Special Administration Regime is not expected to conclude until autumn 2025 or autumn 2026, at which point the final cost to the taxpayer and the amount repaid will be known1. The Department has agreed to write to the Committee with those final figures, with a target implementation date of December 20251. The government has also agreed to provide a review of the effectiveness of its support mechanisms, with a target implementation date of December 20251.
Sources1 cited
- Government response to the Committee of Public Accounts Session 2022-23, committees.parliament.uk