Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Acknowledged
Department closely monitoring ringfenced Bulb entity to ensure full recovery of taxpayer funding.
Conclusion
The SAR will continue until Octopus has repaid the taxpayer funding and Bulb’s outstanding costs and liabilities have been settled. We asked the Department how it was managing the recovery of the temporary taxpayer funding provided to Octopus. The Department and HM Treasury told us that the deal constructed with Octopus would protect taxpayers’ money by preventing profits being moved out of the ringfenced Bulb to the wider Octopus Energy Group.8 The Department told us it was closely monitoring the cash balances and arrangements in place with Teneo and that the ringfenced entity will remain in SAR until taxpayer funding is fully recovered. The Department also told us that it was meeting regularly with Teneo, Octopus and Ofgem who provided updates to the Department on the financial resilience of the ringfenced entity.9 6 Qq 23, 29, 31; C&AG’s Report, paras 4–5, 3.17, Figure 8 7 Qq 92, 108; C&AG’s Report, paras 6, 13, 15, 1.10–12, 1.16 8 Qq 97, 105 9 Qq 107–108 Bulb Energy 11
Government Response Summary
The government agrees with the implied need for ongoing management and monitoring of the Bulb SAR. It states that lessons learned activities are ongoing and will continue throughout the SAR lifecycle, and the department will conduct a benefits analysis towards the SAR's conclusion.
Government Response
Acknowledged
HM Government
Acknowledged
3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2024 3.2 A lesson learned activity on Bulb Special Administration Regime’s (SAR’s) initiation and operation was undertaken in early 2022, followed by one before summer recess 2023. This has helped shape ongoing preparations for any future SAR and enhanced the generic SAR planning products, the routine staff training and the DESNZ-Ofgem SAR Handbook (a tool which sets out how to establish a SAR and explains how an administration would operate). Lessons learned exercises will continue to take place throughout the lifecycle of the SAR, from initiation, operation and ultimately exit. Lessons from these exercises will be consolidated into the department's SAR contingency planning activity to ensure it can continue to respond effectively as market conditions evolve. This will obviously be dependent on the timings surrounding the completion and exit of the SAR. 3.3 The department will be completing a benefits analysis towards the conclusion of the SAR, to review how the objectives have been achieved and whether value has been achieved for customers and taxpayers alike. 3.4 The department continues to engage with the administrators of Bulb who provide regular reporting and progress updates as per the requirements of the Administration Funding Agreement. HM Government monitors and provides the appropriate level of scrutiny and oversight in ensuring the objectives of the SAR remain on track to be achieved such as delivery at the lowest possible cost and the successful full recovery of the Wholesale Adjustment Mechanism Agreement (WAMA) (a framework entered between the administrators and Octopus as part of the transaction) funding provided. However, the responsibility ultimately falls on the administrators as officers of the court, in ensuring the relevant parties fulfil their contractual repayment obligations as stated under the WAMA.