Bulb bailout costs revised down

From when the business was first placed into special administration at the end of 2021 until its sale to Octopus at end of 2022, the government provided its administrators with two financing facilities. Initially, the OBR forecast the first facility would cost £2bn - split roughly evenly across 2021-22 and 2022-23 – and £4.5bn for the second facility.  

In its most up-to-date forecast, both have been revised down. For the first facility, it’s reduced transfers to £1.1bn up to March 2023 – and, while there will be further transfers to and from the Bulb special administration regime before the order end, this is not expected to be material.  

For the second facility, the government has reduced the allotted sum for the facility to purchase energy from wholesale markets from £4.5bn to £2.9bn due to the drop in wholesale energy prices. And as this represents an upper limit for these payments, it’s assumed an underspend of £1bn - meaning it expects payments under this facility to total £1.9bn.  

The firm was placed into special administration in November 2021 – becoming the first energy company to use this process. This saw the government fund its continued operation, with an initial £1.69bn support package provided.