Octopus reckons cost to HMG for Bulb will be £260mn not £6.5bn

Shedman

Just came across an article in the FT where the Octopus CFO reckons they will payback £1.2bn to government after taking over Bulb so combined with lower forecast wholesale prices the overall cost to government should be around £260mn not the £6.5bn previously bandied around.   Be very good news if that turns to to be the case

https://www.ft.com/content/c229be4b-ae31-47bd-ab28-05b5d22d7f36

pochase

How does a payback of 1.2 billion reduce 6.5 billion to 0.260 billion? Simple math tells me 6.5 minus 1.2 is 5.3.

Sorry if it is in article, but there is a paywall.

SnakePlissken

pochase said:

How does a payback of 1.2 billion reduce 6.5 billion to 0.260 billion? Simple math tells me 6.5 minus 1.2 is 5.3.

Sorry if it is in article, but there is a paywall.

If you google "ft bulb octopus" the link for article is readable.

Shedman

pochase said:

Sorry if it is in article, but there is a paywall.

Strange as I clicked it myself after posting to check it worked and I wasn't logged into an account.  Anyway Snake has helped with suggestion as to how to find it.

(And you're right it wasn't clear how 6.5bn comes down to 260mn other than the reduction in wholesale prices having a significant impact..have amended first post to reflect that element as well)

markin

 

--"Stuart Jackson, chief financial officer and a co-founder of Octopus, said on Wednesday .....  .... 

“Our numbers are based on forward prices but our view is that the total cost of taking Bulb into government ownership and then selling it out will net out at around about £260mn lost to the government,” Jackson said."--


Weren't they buying gas at a silly price of..  £000m a week ?


--"LONDON, Dec 12 (Reuters) - Britain's government expects to recoup fully the cost to the public purse from the collapse of energy supplier Bulb, but cannot say how many years this will take, the Treasury's director-general for growth and productivity, Phil Duffy, told lawmakers on Monday.

Last month the government's Office for Budget Responsibility said the bailout of Bulb had cost 6.5 billion pounds ($8.0 billion).

Duffy said most of this cost reflected the advance purchase of gas and electricity for Bulb's customers, which he expected them to pay for as normal, and that the remainder would be recouped from the wider industry or other bill payers."--



"had cost", Not will cost, i think i will take the Office for Budget Responsibility over octopus.

The_Green_Hornet

Same story in the non paywalled Guardian --> https://www.theguardian.com/business/2023/feb/01/octopus-says-it-chose-to-ditch-profit-to-keep-energy-bills-down

Separately, Octopus said the bailout of the collapsed energy supplier Bulb would cost the taxpayer £260m, far less than the £6.5bn estimated in November. Octopus calculated the government built up costs of £1.46bn while the firm was in special administration, but made gains of £1.2bn in recent months largely owing to a sharp fall in wholesale energy costs as well as the undisclosed price Octopus paid to buy the firm.

wakeupalarm

"and that the remainder would be recouped from the wider industry or other bill payers."

So the taxpayer will recoup the huge losses by other bill payers paying higher prices. 

I can see where the other £5bn comes from now.
£6.5bn - £1.2bn (Octopus payback)   = £5.2bn
£5.2bn - £260mn(Loss on HMG books) = ~£5bn
£5bn charged to "other bill payers"

ariarnia

posting this in case it helps people read the article. https://12ft.io/