Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Rejected
Nascent technologies for decarbonisation will incur significant costs for taxpayers and consumers
Conclusion
We questioned the Department as to how it is planning to protect consumers and taxpayers from the cost of decarbonising the power sector, particularly when a challenge of proceeding quickly is that deploying nascent technologies before there is a competitive market for them, requires taxpayer support. The Department told us that it is seeking to achieve its objective at least cost to the consumer, but confirmed that nascent technologies such as CCUS and small nuclear reactors will result in significant cost for both taxpayers and energy bill payers. It added that bill payers are not currently paying anything up-front for renewables, or the nuclear power station under construction at Hinkley.55 However, it confirmed bill payers would, should it go ahead, pay for a new nuclear power station at Sizewell before it is operational, using a form of financing called a regulated asset base that it believes would be cheaper in the long run.56
Government Response Summary
The government rejects the committee's observation, outlining its focus on consumer security by reducing and affording bills and describing its approach to managing policy interventions, 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.