UK Inquiry Tracker

Bulb Energy

Public Accounts Committee Closed Inquiry

Opened: 29 Mar 2023 Closed: 14 Feb 2024 Parliament page

Bulb Energy collapsed in the summer of 2021 and was placed in special administration by the government. This was the first time that the government had appointed a special administrator to operate an energy supplier to maintain the supply of energy to customers. In June 2022 the NAO reported on … Read more Bulb Energy collapsed in the summer of 2021 and was placed in special administration by the government. This was the first time that the government had appointed a special administrator to operate an energy supplier to maintain the supply of energy to customers. In June 2022 the NAO reported on the energy supplier market, and noted that £0.9bn had been spent by government on running Bulb through the special administration regime in 2021-22. In October 2022, following a sale process, Octopus Energy was identified as the acquirer of Bulb’s customers, business assets and liabilities, including customer credit balances. In November 2022 the government obtained court approval for the transaction agreement with Octopus. Three energy companies commenced legal proceedings relating to this agreement. Dame Meg Hillier MP, Chair of the PAC, commenting on the NAO report, said: “Government took a risk bailing out Bulb when it failed. Since November 2021, taxpayers have spent £3bn protecting Bulb customers' energy supply. Government needs to manage the recovery of the bulk of taxpayer funding for Bulb from Octopus over the next couple of years and we need to know if there are costs to be passed onto energy bill payers.” Based on the NAO’s latest report , the Committee will question two panels of witnesses on the special administration, sale process and transaction agreement; and on the amount of taxpayer support provided to Bulb Energy, the agreement with Octopus, and the government’s plans to recover this funding. The first panel will include the Chief Executive of the energy regulator Ofgem; the Chief Financial Officer of Octopus Energy and Teneo, the appointed special administrator. For the second panel the Committee will question senior officials at the new Department for Energy Security and Net Zero, and HM Treasury. If you have relevant evidence to inform the Committee’s questioning of either panel of witnesses, please submit it here by 23:59 on Wednesday 10 May 2023.Please have a look at the requirements for written evidence submissions and note the Committee cannot accept as evidence material that has been published elsewhere. Show less

4 Recommendations

21 Conclusions

1 Report

1 Oral session

1 Letter

1 Event

Activity timeline 5 events

14 Feb
2024

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Seventy-fourth report from Session 2022-23

1 Nov
2023

Report published

Seventy-Fourth Report - Bulb Energy

19 Jun
2023

Correspondence

Correspondence from Jonathan Brearley, Chief Executive, Ofgem, re Bulb energy, dated 14 June 2023

25 May
2023

Oral evidence

Bulb Energy

25 May
2023

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

Bulb Energy

Oral evidence sessions 1 session

25 May 2023

View on parliament.uk

Bulb Energy

Dan Osgood · Department for Energy Security and Net Zero James Bowler CB · HM Treasury Jeremy Pocklington CB · Ministry of Defence Jonathan Brearley · Department for Energy Security and Net Zero Jonathan Brearley · Ofgem Matt Cowlishaw · Teneo Phil Duffy · HM Treasury Stuart Jackson · Octopus Energy

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Seventy-Fourth Report - Bulb Energy	HC 1232	1 Nov 2023	25	Responded

Recommendations & Conclusions

5 results

5 Conclusion Acknowledged

Seventy-Fourth Report - Bulb Energy

Update Government Corporate Finance Profession strategy to ensure civil service skills for supplier failures.

The complex nature of the Special Administration Regime and sale process has required specialist skills and advice that are in limited supply within government. During the SAR and sale process for Bulb, government sought and appointed various advisers to support … Read more

Government Response

The government agrees with the recommendation, outlining that the GCFP continuously evaluates its purpose and will include raising awareness of specialist skills in its forward plan, as well as continuing to monitor and update knowledge-sharing tools and arranging seminars.

HM Treasury

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7 Conclusion Acknowledged

Seventy-Fourth Report - Bulb Energy

Department closely monitoring ringfenced Bulb entity to ensure full recovery of taxpayer funding.

The SAR will continue until Octopus has repaid the taxpayer funding and Bulb’s outstanding costs and liabilities have been settled. We asked the Department how it was managing the recovery of the temporary taxpayer funding provided to Octopus. The Department … Read more

Government Response

The government agrees with the implied need for ongoing management and monitoring of the Bulb SAR. It states that lessons learned activities are ongoing and will continue throughout the SAR lifecycle, and the department will conduct a benefits analysis towards the SAR's conclusion.

HM Treasury

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8 Conclusion Acknowledged

Seventy-Fourth Report - Bulb Energy

Estimated repayment from Octopus decreasing, subject to volatile wholesale energy market conditions.

The NAO reported that the estimated amount Octopus was expected to pay back was £2.96 billion, based on the wholesale cost allowance in Ofgem’s price cap methodology. This included the one-off payment of £1.06 billion made by BEIS on 20 … Read more

Government Response

The government acknowledges the estimated repayment of £2.8 billion by Octopus, expected by September 2024 with a potential deferral to September 2025. It further states that it does not expect full recovery and intends to recover any shortfall from energy consumers, with the final cost to be calculated at the SAR's conclusion.

HM Treasury

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10 Conclusion Acknowledged

Seventy-Fourth Report - Bulb Energy

Estimated total taxpayer funding for Bulb sale reaches £3.02 billion; final cost unknown.

The total cost of the taxpayer funding committed to the sale and supporting Bulb was made up of a number of areas of spend. These included: £0.16 billion to offset Bulb’s remaining liabilities; a one-off loan of £1.06 billion to … Read more

Government Response

The government agrees with the conclusion, confirming that the actual cost of the SAR will be known only after its conclusion, expected in autumn 2025 or 2026. It commits to informing the Committee of final confirmed amounts and providing a written update on estimated outturns and timelines by December 2025.

HM Treasury

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11 Conclusion Acknowledged

Seventy-Fourth Report - Bulb Energy

Anticipated shortfall in Bulb recovery likely to be passed onto energy consumers.

When we examined the regulation of energy suppliers in November 2022, we found that the SoLR intervention was expected to cost £2.7 billion. This cost was expected to be passed onto energy consumers and resulted in an increase in average … Read more When we examined the regulation of energy suppliers in November 2022, we found that the SoLR intervention was expected to cost £2.7 billion. This cost was expected to be passed onto energy consumers and resulted in an increase in average bills by £94 per household.16 We therefore asked the Department how it would determine whether there was a shortfall at the end of SAR and how much of this would also be passed onto customers. The Department told us that it expected to recover the majority of the £3.02 billion taxpayer funding, but that it expected that there would be a shortfall. At the time of the NAO report, Octopus was expected to repay £2.96 billion to meet the cost of the collateral and the wholesale energy costs for Bulb. This would leave a shortfall of £246 million that will also need to be recovered (including accrued interest, which was applied to the taxpayer funding at a market rate of interest set at a level that was not a form of subsidy). At the time of our evidence session, Teneo reported that the estimated amount Octopus would be due to repay to government was £2.8 billion. HM Treasury explained that recovery of the shortfall through energy consumer bills formed part of the system set in place by the legislation included in the Energy Act 2011. It explained that this was originally set up to ensure continuity of energy supply to consumers, but that the cost of such processes go back to energy consumers. The Department explained that it had not yet been decided whether the shortfall will be recovered through energy consumers or taxpayers, but that it had already set out to Parliament its intention to recover the cost from energy consumers. The Department and Teneo told us that should this be the case, this would cost an estimated 75p per month or £8 to the average household for a year, or £4 per year over two years.17 15 Q 105; C&AG’s Report, paras 13–15, 2.7, Figure 5 16 House of Commons Committee of Public Accounts, Regulation of energy suppliers, Show less

Government Response

The government agrees with the conclusion, confirming the SAR's expected conclusion in autumn 2025 or 2026 when final costs will be known, including any shortfall. It commits to providing the Committee with a written update on final confirmed amounts and timelines for recovery by December 2025.

HM Treasury

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Government Response AI assessment · 24 of 4 classified

Accepted 16

Acknowledged 5

Not Addressed 3

Total 4 recs + 21 conclusions

Correspondence 1 letter

19 Jun 2023 Correspondence from Jonathan Brearley, Chief Executive, Ofgem, re Bulb energy, dated 14 June 2023

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