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UK billpayers will to cover £6bn cost of failed energy firms

Billpayers could be on the hook for almost £6bn to cover the cost of bailing out suppliers that went bust during the energy crisis, according to the government’s spending watchdog.

The public accounts committee (PAC) has issued a “sobering reminder” that the government has no guarantee that it will recover almost £3bn in costs for rescuing about 1.5m households affected by the collapse of Bulb Energy.

In addition to the cost of bailing out 29 suppliers that collapsed between July 2021 and May last year, the energy crisis could pile a further £2.7bn onto home energy bills at a time that households “can ill afford such uncertainty”.

In a new report, the committee said that the cost of bailing out Bulb Energy, which collapsed in November 2021, is expected to be covered by Octopus Energy, which agreed to pay £2.96bn by September 2025 to buy the company.

But the committee warned that billpayers would have to cover a £246m shortfall, and could still run the risk of being in line for the full cost of the bailout if Octopus cannot meet its commitment.

Dame Meg Hillier, the committee chair, said: “Our report is a sobering reminder that we are still living with the fallout of the failure of so many energy suppliers in 2021-22. While the government and regulators did the right thing in moving swiftly to protect consumers, the uncomfortable truth remains that the recovery of that investment hangs on the commercial success of one company. The public can ill afford such uncertainty, particularly in challenging economic times.”

The committee urged the government to review its energy support schemes after it found that some of the most vulnerable and hard-to-reach customers have yet to benefit from the government schemes. About 76% of vouchers issued to households to support them with their energy bills have been redeemed, it said.

Ministers ended a scheme that automatically paid all households £400 towards their energy bills last winter. In its place, the government will offer targeted support including a £900 payment for those on means-tested benefits, £300 for pensioners and an extra £150 for disabled people. These are in addition to the £150 payment available through the warm home discount.

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