Cost of Bulb bailout rises to £6.5bn
The cost to the taxpayer of bailing out energy supplier Bulb has soared to nearly four times initial expectations, according to a new forecast.
The Office for Budget Responsibility (OBR), the Government’s official forecaster, said the total cost for propping up the failed supplier has reached £6.5 billion, ahead of its sale to Octopus Energy.
Bulb had around 1.6 million customers when it collapsed a year ago – making it simply too big for customers to be transferred to a new supplier by Ofgem as is normally the case.
As a result the Government was forced to step in and run the business under a so-called special administration.
The cost of the Bulb intervention has increased essentially because it lasted for more months than factored into the March forecast
It allowed Bulb to keep trading until officials and administrators could figure out what to do with the households that rely on it to keep their lights on.
It was initially estimated to cost the taxpayer around £1.7 billion to prop up the company. But the administration dragged on for longer than expected, pushing up costs.
Three months ago energy consultancy Auxilione estimated that the cost might reach around £4 billion. This would firstly be paid by the Government, which would then recoup it by charging households more for their energy.
“The cost of the Bulb intervention has increased essentially because it lasted for more months than factored into the March forecast,” said Andy King, from the OBR.
“The transfer was six months longer and the transfer cost was the remaining part of that.”
Andy Prendergast, national secretary for the GMB union, said: “The fact bailing out one failed energy company has cost £6.5 billion is yet more proof the attempt to use the markets has been an unmitigated disaster.
“How Ofgem allowed a company like this to rack up such unsustainable debt beggars belief.
“The simple fact is that energy is an essential service and needs to be treated as such.
“The Conservatives’ free market fetishism has once again cost the country dear.”
The best videos delivered daily
Watch the stories that matter, right from your inbox