The boss of one of Britain’s biggest energy companies expects it to take a £100 million hit from the record rise in wholesale energy costs.
As households brace for another hike in energy bills this spring, Octopus Energy founder and chief executive Greg Jackson said the business – now Britain’s fifth biggest electricity and gas supplier – was expecting big, but not fatal, losses.
He recently warned its UK customers that gas and electricity bills were likely to rise more than 75 per cent from April, when the Government updates the cap on fuel charges. In an email to customers, he said he feared many people did not "truly appreciate the size of the issue" facing householders.
He said the cost of energy on the global market was now three times higher than it was a year ago, with customers facing a "massive hike" in payments, which could see a typical bill rise by £60 a month.
Octopus, which took on 580,000 new customers when Avro Energy went under last autumn, employs about 300 people at a customer support centre in Leicester and is planning a further 300 in Greater Manchester. The business prides itself on supplying 100 per cent green electricity.
Mr Jackson said: “2022 will be tough in energy, but we will fight for customer interests and work with government and industry to find solutions which may mitigate the issues for customers whilst doubling down on the investments in technology, growth and renewables which will help avoid such crises in future.”
Over the weekend he told the Financial Times the business was having to absorb higher costs because more households than expected were moving from fixed-price deals when their contract expired to cheaper tariffs protected by the price cap, which was introduced in 2019.
He and other industry heavyweights have been urging the Government to help them smooth out price volatility without risking their own balance sheets.
He told the FT he would like the Government to inject money into reducing bills for customers and then recoup it over a period of time.
There have been calls for Government to slash VAT on energy bills and suspend the environmental levy to ease pressure on consumers.
Trade body Energy UK has said that Ofgem and the Government must urgently consider measures to deal with rising bills.
A spokesperson said: “Millions of households are currently protected by the energy price cap.
"However, with the cap due to increase in April, we understand this can be a worrying time for many households.
“Suppliers have already provided hundreds of millions of pounds in financial assistance since the start of the pandemic and the industry will continue that support this winter.
“However, there is only so much suppliers can do in the face of rising gas prices – policy and network costs, VAT and the sheer cost of buying gas make up the majority of the bill.
“Given the scale of the projected increases next year, Ofgem and the Government need to look at a range of potential measures to reduce bills by a big enough amount to make a real positive difference for customers.”
Since launching in 2016, Octopus Energy Group has raised more than $1.5 billion in investment (£1.1 billion) and now comprises nine businesses, serving more than 3.3 million customers around the world.
Latest figures showed revenues were up 62 per cent in the year to last April – from £1.2 billion to £2 billion – while operating losses halved from £63 million to £31 million.
The group said the operating loss for its UK energy retail business last year was £1 million – before taking into account customer acquisitions and exceptional accounting charges.
It has just announced the acquisition of Plüm énergie, a French green energy company with almost 100,000 energy accounts.
Octopus Energy Generation, the group’s generation arm manages a 3GW renewable generation portfolio across seven countries in Europe, and is planning to invest a further £25 billion by 2030 in new solar and wind farms in the UK and around the world.
