- PAC concerned that not all of those who need energy bill support are yet accessing it
- Calls for Govt and regulator to strike the right balance between competition and market resilience following ‘low bar’ approach taken to licensing energy suppliers
Risks remain around the potential cost to the taxpayer following the collapse of Bulb Energy. In a report published today, the Public Accounts Committee (PAC) warns of uncertainties around the recovery of the £3.02 billion of taxpayer funds currently committed to funding Bulb, with concerns that extra costs could be added to customers’ bills at a time when many are already struggling with energy prices. The report also raises the alarm that not all of those who need support with high energy bills may yet be accessing it.
While the Government expects to recover most of the investment insulating 1.5 million customers from Bulb’s failure, consumers may ultimately be left to foot the bill if this funding is not fully recovered. An estimated £2.96 billion of taxpayer funds could be recovered from Octopus Energy Group which acquired Bulb, leaving an estimated shortfall of £246 million to be borne by billpayers.
But this shortfall is in addition to the estimated £2.7 billion incurred for the 28 energy suppliers which failed before Bulb. The recovery of funding is also dependent on the continued commercial success of Octopus Energy, and could be deferred to September 2025 if wholesale energy market conditions worsen. The PAC is calling for details of the final cost to the taxpayer, including how much has been repaid by Octopus and any shortfall that Government plans to recover from consumers.
While commending the Government and regulator Ofgem for taking action to help protect customers after energy suppliers failed, the PAC remains concerned that not all of those who need support are yet accessing it. The inquiry heard that some 76% of vouchers issued to households to support them with their energy bills have been redeemed, leaving a significant portion of eligible households who have yet to claim the vital support.
The PAC’s report also highlights the ‘low bar’ approach taken by Ofgem to licensing energy suppliers. At least 73 new energy suppliers entered the market between 2010 and May 2022, but at least 65 suppliers exited the market over the same period. Ofgem’s failure to ensure suppliers’ financial resilience resulted in costs to the public when companies failed. The PAC recommends Ofgem and government ensure only suppliers with the necessary financial resilience to survive challenging market conditions are granted licences, at the same time as promoting healthy competition in the energy market.
Commenting on the inquiry, Sir Geoffrey Clifton-Brown MP said:
“The Public Accounts Committee has released a report into an inquiry into the ‘Bailout of Energy Supplier Bulb’, and the uncertainty around the recovery of the £3.02 billion of taxpayer funds committed to funding Bulb. As well as concerns that extra costs could be added to customers’ bills at a time when many are struggling with energy prices. These are huge amounts of money and as a committee, we still have questions about how it is all going to be recovered. There are lessons to be learned for Ofgem – you cannot regulate with such a light touch. New suppliers coming into the energy market must be sufficiently well-capitalised.”
https://committees.parliament.uk/publications/41910/documents/207946/default/