Octopus Energy has said it chose to turn down profits last year in order drive bills down for its customers.
The energy supplier said it kept bills down £50 lower for the average households compared to the price it was allowed to charge under Ofgem rules at the time. The major financial decision cost the business more than £150 million in lost revenue, forcing it to suffer a loss for the year.
The business highlighted that its operating loss was £141 million in the year to the end of April 2022. Meanwhile, the pre-tax loss was slightly under £166 million, up from £75 million the year before while revenue hit £4.2 billion, double that of the previous year.
“We invested heavily in holding customer prices down,” finance boss Stuart Jackson said. “So we held our standard variable tariff meaningfully below the price cap through that period and effectively provided some shielding to customers against the rising wholesale cost.
“(The loss is) more than explained by the pricing decisions we’ve made, and the high proportion of people that were able to come on to the standard variable tariff.”
Mr Jackson added that the business could afford the loss because it has lower running costs due to technology investments. It increased the number of customers on April 30, 2022 by 60 per cent which mostly came from Avro Energy.
In the autumn of 2021, Avro Energy went out of business, leaving behind 580,000 customers. Because it took these customers, Octopus was able to make a claim to Ofgem to cover the costs of transferring them which were ultimately paid by being split across all billpayers in the country.
Octopus revealed it gained around £635 million from the Avro levy. Octopus also took on millions of extra customers from Bulb which collapsed into special administration.
Chief executive Greg Jackson said: “It has never been more important to build a better, fairer energy system for all and Octopus Energy Group is truly leading the way. We could have made a profit but now’s not the time – instead we chose to absorb £150 million of escalating costs on behalf of customers through prices and support funds, debt forgiveness and increased service.”
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