In the United Kingdom, ring fence profits arise from income and gains from oil extraction activities or oil rights in the UK and UK continental shelf, and are subject to a higher rate of corporation tax.
[4] In the case of loans or bonds, ringfencing generally allows an investor to have both a link to a specific asset they possess (such as wind farms owned by a utility), while also enjoying the full credit support of a utility's balance sheet.
This is done mainly to protect consumers of essential services such as power, water and basic telecommunications from financial instability or bankruptcy in the parent company resulting from losses in their open market activities.
A high-profile success story with utility ringfencing occurred during the Enron meltdown of 2001–2002; Enron acquired Oregon-based Portland General Electric in 1997, but the local power generator was ringfenced by the state of Oregon prior to the acquisition being completed.
This protected Portland General Electric's assets, and its consumers, when Enron declared bankruptcy amid massive accounting scandals.