Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Rejected
Significant investment in power sector lacks clear assessment of spending timelines and funding
Conclusion
While government has estimated that £280 to £400 billion of public and private investment in new generating capacity will be needed by 2037, it has not yet assessed when there may be periods of higher spending and how this will be paid for, particularly if consumer bills remain high due to wholesale prices.51 Since privatisation in the 1980s and 1990s, the power sector has largely relied on private investment for building and renewing infrastructure.52 The cost of building, maintaining and renewing the system therefore tends to fall to consumer energy bills rather than taxation.53 The Climate Change Committee has estimated that future capital expenditure costs will increase to £18 billion a year running up to 2035, and then decrease along with operating costs. It has also estimated that from 2044 onwards, the annual operational cost savings are projected to more than offset the annual additional capital investment required for electricity generation.54
Government Response Summary
The government rejects the committee's observation, stating its focus on consumer security, affordable bills, and its current approach to policy decisions, cost impacts, and monitoring energy prices.
Government Response
Rejected
HM Government
Rejected
5.1 The government disagrees with the Committee’s recommendation. 5.2 The department is focused on consumer security by bringing bills down, keeping them affordable. The government took steps to shield consumers and companies from the worst effects of the rise in global energy prices, paying around half a typical household’s bill over winter 2022-23 and half the wholesale energy costs paid by some businesses. 5.3 In March 2023, the Secretary of State noted that access to cheap, abundant and reliable energy provide the foundation stone of a thriving economy, with homes and businesses relying on it to deliver our future prosperity. Following the unprecedented cost of living support that winter, the Secretary of State noted that Powering Up Britain sets out how the government will fix this problem in the long term to deliver wholesale electricity prices that rank amongst the cheapest in Europe. 5.4 A decarbonised power sector is a key step on the path to a low-cost, clean energy system by 2050. The impact of policy interventions on prices and bills is therefore a key factor in making decisions. 5.5 Future costs are naturally subject to uncertainty, and the extent to which costs impact bill payers and taxpayers will depend on future policy decisions, as well as on factors such as the development of flexible and low-carbon generation technologies, and the evolution of global power markets. 5.6 The government currently publishes information on cost impacts and estimates for specific policy interventions in Impact Assessments, and monitors energy prices, publishing regular updates via the series of Quarterly Energy Prices reports.