UK Government nets £1.5bn profit from Octopus-Bulb deal, closing the bailout chapter

The UK government has secured a £1.5bn windfall following Octopus Energy’s takeover of collapsed energy supplier Bulb, marking the conclusion of the Bulb rescue saga. Octopus Energy has paid more than £3bn to the government, providing a major financial boost amid pressing budget constraints.

The government intervened in November 2021 when Pulp entered administration. A year later, Bulb was sold to Octopus Energy in a landmark deal that proved highly beneficial for both taxpayers and bill payers.

The deal was delivered to the taxpayer

As part of the agreement, bulk arrangements were established to hedge costs to Bulb customers, ensuring that energy prices during the transition period will not be a burden on taxpayers or bill payers. In addition, a profit-sharing mechanism was included in the deal until Octopus repaid the hedging funds in full.

On 30 September 2024, Octopus made its final payment, completing the transaction without any loss to the public finances, a much better result than the initial cost forecast of £6.5 billion.

The government’s profits from the deal included £1.28bn from wholesale arrangements, benefiting from lower energy prices, £19m from a profit-sharing mechanism, and £200m from interest. An additional £20 million is expected from the profit-sharing agreement.

There is no additional cost to bill payers

Unlike many other failed companies, this agreement did not impose additional costs on energy customers through higher standing fees. Octopus also ensured employment opportunities for all Bulb employees, with 94% choosing to stay, and seamlessly transitioned Bulb’s 1.5 million customers onto its systems within six months.

Greg Jackson, founder of Octopus Energy, praised the result, saying: “This result is a fantastic success story for taxpayers and bill payers. Octopus worked hard to reach a fair deal that saved the Treasury billions compared to the alternatives.