Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Rejected
Long-term consumer bill reductions from renewables seem inconsequential amid high wholesale prices
Conclusion
Although the Department was unable to tell us when bill payers would see lower bills as a result of investment in zero and low-carbon generating infrastructure, it highlighted recent analysis by Ofgem that renewables funded by contracts for difference are reducing annual household bills by an average of £54.57 However, it acknowledged that in the context of recent unprecedented high wholesale gas prices, which are contributing to the increased cost-of-living, the benefit to consumers may seem inconsequential.58 The Department highlighted that, as the electricity system accommodates more projects with contracts for difference, this reduction in bills should increase.59 51 Department for Business, Energy & Industrial Strategy, Net Zero Strategy: Build Back Greener, 19 October 2021; C&AG’s Report, para 2.18 52 C&AG’s Report, para 2.17 53 C&AG’s Report, paras 12, 2.17 54 Q 89; C&AG’s Report, paras 1.15–1.16, Figure 10 55 Qq 87, 90–91 56 Qq 90–92 57 Q 92 58 Qq 93–94 59 Qq 89, 92–94 14 Decarbonising the power sector
Government Response Summary
The government explicitly disagrees with the committee's (implied) recommendation, stating its focus is on consumer security by bringing down bills. It highlights past support schemes and its long-term strategy, Powering Up Britain, to deliver wholesale electricity prices amongst the cheapest in Europe.
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.