Bulb Energy’s inglorious year-long stint in special administration has cost £6.5bn, according to the latest reports from the Office for Budget Responsibility.
Documents released by the public body, accompanying the autumn statement, reveal that £4.6bn will be spent overseeing the company’s de-facto nationalisation in 2022-23.
This is a sharp uptick from March, when the OBR predicted the state-backed rescue would cost £2.2bn over two years, while more recent calculations from forecasters suggested it would cost £4bn.
The challenger supplier fell into de-facto nationalisation last November, crumbling under soaring gas prices, the constraints of the price cap and an insufficient hedging strategy.
Since then, Bulb has been unable to hedge to meet the energy needs of its 1.6m customers, having to buy gas at spot prices on highly volatile wholesale markets – which has driven up the costs.
It has also endured a protracted sale process, finally being sold to rival Octopus last month, under terms which remain opaque.
City A.M. understands the deal includes a nine figure lump sum, a profit-sharing deal and hedging support.
However, the terms around the profit-share deal and the hedging support are yet to be clearly outlined, including the potential interest rates and the percentages involved in any profit arrangements.
It is also not clear what size customer credit balances are held by Bulb – with The Guardian’s freedom of information request on the issue being snubbed on the grounds of commercial confidentiality.
Meanwhile, Ofgem’s report on the impact of the transaction on consumers is yet to be published.
The deal is still awaiting court approval after rival suppliers last week challenged the deal amid concerns over market competition and transparency – pushing back its confirmation by three weeks.
Teneo, Bulb’s administrator, and Octopus have both been approached for comment.