Poor UK energy contracts 'means bills will soar by £1.5bn', says National Audit Office

Written by Matt Foster on 17 May 2018 in News

The spending watchdog has criticised the UK Government’s use of contracts for difference to promote green energy

Wind turbines - Image credit: Fotolia

Consumers will pay an extra £1.5bn in energy bills over the next fifteen years because of a bungled tweak to government policy, according to a new report by UK public spending watchdog the National Audit Office.

The Department for Business, Energy and Industrial Strategy uses so-called 'contracts for difference' to try and boost investment in low-carbon energy.

The deals fix the price at which suppliers are paid for generating energy, but they leave bill-payers to plug the shortfall if market prices dip.

A report by the National Audit Office found that the way 11 such contracts were drawn up last year means consumers will be left £100m a year worse off over the lifetime of the deals.

The watchdog also said it could not find any evidence that officials at BEIS properly assessed the risk to consumers of its approach.

Public Accounts Committee chair Meg Hillier lambasted the UK Government's handling of the deals.

“The rules BEIS set for the auction of contracts for difference has cost the consumer an extra £1.5bn, and only a small amount of the extra money will be used to generate additional energy capacity," she said.

“Once again the department has neglected to put the interests of service users at the forefront of its thinking.”

The scathing report came as a separate study by MPs on the Environment Audit Committee warned of a "dramatic and worrying collapse" in investment in green projects in the UK.

Investment in clean energy fell by 56 per cent in 2017, the committee found – its lowest level since 2008.

Committee chair Mary Creagh said: “Billions of pounds of investment is needed in clean energy, transport, heating and industry to meet our carbon targets,”

“The Government must urgently plug this policy gap and publish its plan to secure the investment required to meet the UK’s climate change targets.”

Categories

Tags

Categories

Related Articles

Snubbing Theresa May’s Chequers plan could lead to “disaster” for the environment, Green groups warn
15 October 2018

Greener UK chair Shaun Spiers said: “There is now a real danger that the UK will leave the EU without a deal or consciously pivot towards countries with lower environmental standards.”

People who rely on electric heating almost twice as likely to live in fuel poverty, finds CAS
11 October 2018

CAS report found that many of those who rely on electric heating are unable to afford to heat their homes sufficiently

Digital infrastructure must be given same priority as traditional construction projects, says Michael Matheson
10 October 2018

The Scottish Government this week announced plans to establish an infrastructure commission to advise ministers on how spending can deliver maximum benefit for the economy

Professor Andrew Millar named new chief scientific adviser for environment, natural resources and agriculture
28 September 2018

Millar will work alongside chief scientific adviser for Scotland Professor Sheila Rowan and chief scientist (health) Professor Crossman

Share this page