Bulb bailout may cost UK government billions less than feared, says watchdog

theguardian.com:

The bailout of the bust energy supplier Bulb is expected to cost the government billions of pounds less than originally feared because of a sharp fall in wholesale gas prices, according to the National Audit Office.

The public spending watchdog said the government may end up spending £246m on saving the supplier, which has 1.5 million customers and was acquired by Octopus Energy late last year.

Although this may ultimately be added to customer bills, it represents a far lower cost than the £6.5bn estimate made in November by the Office for Budget Responsibility (OBR).

The NAO said in a report that the gross cost to the taxpayer between Bulb’s collapse in November 2021 and the end of January this year was just over £3bn. It expects Octopus to repay £2.96bn as part of a deal that saw the government take on the cost of buying customers’ energy over the winter. Octopus is not expected to repay these funds until 2024, or even 2025.

The OBR said this month that the government had indicated the bailout would be “fiscally neutral”.

The cost of Bulb’s administration, which was expected to be the biggest government bailout since the rescue of RBS in 2008 during the financial crisis, has been closely watched amid complaints from rivals who have accused Octopus of receiving preferential terms during the bidding process. Octopus denies this was the case.

The cost of bailing out Bulb has hinged on wholesale gas prices, which have soared over the past year after Russia’s invasion of Ukraine squeezed supplies.

The NAO detailed how the government and Bulb’s administrator, Teneo, were faced with a choice of buying energy well in advance or in the day-ahead market. The former strategy would have provided more certainty on budgets but the