The Office for National Statistics (ONS) has completed a classifications assessment of the transfer of Bulb Energy Limited (in special administration) to Octopus Group Limited. This transfer was approved by the UK government on 29 October 2022, and completed as part of the Energy Transfer Scheme (ETS) on 20 December 2022.

The classification assessment was completed in the context of international statistical rules laid out in the United Nations System of National Accounts 2008, the European System of Accounts (ESA) 2010 and the accompanying Manual on Government Deficit and Debt 2019.

The ONS has concluded that Bulb Energy Limited in special administration is no longer considered to be an institutional unit. It is therefore classified with its controlling body, which is the Department for Energy Security and Net Zero from the date of the Energy Transfer Scheme on 20 December 2022. This is because Bulb’s energy supply licence and Bulb’s customers, with the majority of its assets, liabilities and functions, have transferred to Octopus Energy Operations Limited (formerly known as Bulb UK Operations Limited), which is wholly owned by Octopus Energy Retail 2022 Limited (details follow).

There is no impact on the classification of Octopus Energy’s existing operations, as all aspects of the energy transfer scheme ensure that the newly established Octopus companies, and Bulb Energy’s transferred assets and liabilities, are ringfenced from the rest of the Octopus Energy Group.

The ONS has also concluded that there are restrictions placed on the new company Octopus Energy Operations Limited under statutory obligations, established under the Energy Act 2004. It cannot sell its shares, dissolve itself or change its business activity under the terms of the agreement under the ETS (see ESA 2010, 20.309 (i)), until the High Court of Justice confirms that the processes under the special administration regime have been completed, for legal purposes. It is therefore considered to be under public sector control, and a market body, as it holds the energy supply license transferred from Bulb Energy as part of the ETS, competes with other energy suppliers, and sells its energy at market prices. It has therefore been classified to the public non-financial corporations subsector, with retrospective effect from 20 December 2022.

A further new company, Octopus Energy Retail 2022 Limited, was also established by the Octopus Energy Group to acquire the shares in Bulb UK Operations Limited (now Octopus Energy Operations Limited). This was part of an agreement by the wider Octopus Group to establish the ring-fenced structure governed by agreement under the ETS. The ONS concluded that Octopus Energy Retail 2022 Limited is a holding company as its primary objective is to hold the assets of its subsidiary, Octopus Energy Operations Limited (see ESA 2010, 2.14 (b). It is therefore an institutional unit and under public sector control as it is under the same statutory obligations as Octopus Energy Operations Limited. Octopus Energy Retail 2022 Limited has therefore been classified to the public captive financial institutions and money lenders subsector (ESA 2010, 2.21), again with retrospective effect from the date of the ETS on 20 December 2022.

Following the ETS on 20 December 2022, government payments were made between 20 December 2022 and 31 March 2023 under the ETS agreement to both Bulb Energy Limited in special administration, and to Octopus Energy Operations Limited. In cash terms, these government payments have already been included in the public sector finances and contributed to a small increase in public sector net debt in the financial year ending 31 March 2023. There may be further small updates to public sector net debt for this period when these classification decisions are implemented in full.

Early indications are that the overall impact on public sector net borrowing for the same period is also expected to be small, once the intra-public sector payments and receipts have been fully considered. The impacts will be verified when data for all the relevant flows are available and public sector net borrowing statistics will be updated in due course.

The total impact on the public sector finances will not be fully known until Bulb comes out of special administration.

Further details of these classification decisions above can be found in our Public Sector Classification Guide.