Hedging

Hedging:
"buying or selling commodity futures as a protection against loss due to price fluctuation"
"Hedging is a sophisticated risk management strategy. Hedges are similar to insurance. They can limit the price of an asset you want to buy in the future"

I do love a good put-down. I'm not much good at them myself, but I can't help but admire people who are.

The UK energy supplier, Bulb, went bust when energy prices started to spiral out of control, with 1.5 million customers on board. This was too many for the existing energy industry protocols (for moving customers of bankrupt suppliers on to new providers) to cope with. Our market-deifying government was forced to recognise that markets are not always infallible, socialise the loss, underwrite the ongoing business and put it up for sale

Eventually, a sale to Octopus (who happen to be our supplier) was agreed. At the tail-end of a financial statement about something else, the government let slip in a footnote that the total cost of the rescue and sale for the taxpayer could be in the region of £4.5 billion - £3000 per Bulb customer. The details of how Octopus was selected, and the terms of the sale, are exceedingly opaque - not something we mere electors or taxpayers should worry our heads about

One of the reasons does seem to be that, when he was Business Secretary, Kwasi Kwarteng would not allow Bulb to "hedge" its energy purchases, so it has been unable to protect itself from the crazy fluctuations in the world price of gas. Hedging is industry standard practice, but that cut no ice with his ideology

Other suppliers have taken umbrage at the Octopus deal, cried "foul" and gone to law; a judicial review will take place in February. Big-six giants British Gas, E.ON and Scottish Power have been particularly vocal in their protest about 'favours' handed out to what they regard as a chippy upstart. Given the lack of establishment openness about the process and the deal, it is almost impossible to say who is right

Octopus, however, are projecting confidence, or at least chutzpah, and their response to the lawsuit is a classic for the age:

A spokesperson said: “This court case looked vexatious to begin with, but now...looks even more desperate, and the judge has rejected their fishing expedition in its entirety. Maybe if they focused on looking after customers instead of expensive court cases, they wouldn’t have won a wooden spoon for the worst service of any company in any sector, while Octopus is Which? recommended for the sixth year in a row.” Touché

'Hedging' does, of course, have other meanings, for example "making a calculatedly noncommittal or evasive statement; avoiding answering a question or committing yourself to a particular action or decision". Perhaps this is the only meaning Mr Kwarteng is deeply familiar with, hence his reluctance to permit it

I have spent some of the day hedging in my own right. The outcome is not a limited loss or a truth avoided, but a satisfying compost bin full of finely-chopped clippings. I went a bit over the top on the fine chopping, but I've got a lot still to fit in, they are only collected fortnightly, and I'm not short of energy