Energy News

Energy bills could rise because of wind farm contracts

Friday 18 January, 2013

By Martin Fagan

MPs made “shocking errors” when awarding contracts for offshore wind farms

Politicians’ failure to negotiate competitive contracts for wind farms and solar panels could mean Brits get no benefit from these renewable energy sources but still have to pay for them through higher energy bills.

A new report by the Parliamentary Public Accounts Committee (PAC) criticised the licensing system for bringing electricity from offshore wind farms onto the National Grid.

The Committee said it was “unlikely” this will deliver any savings for consumers and it “could well lead to higher [energy] prices”.

The contracts guarantee that power firms will be paid even if they fail to deliver energy to households. Chair of the PAC, Labour MP Margaret Hodge, described the contracts as a “licence for the private sector to print money at the expense of hard-pressed consumers”.

The irony is that the architect of these licences is her own party leader, Ed Milliband, who formulated them when he was climate change secretary during the last Labour government, even though they are being implemented by coalition ministers.

Milliband was also responsible for the subsidies - known as ’feed-in tariffs’ - paid to companies and households who generate electricity by wind or solar power, which cost households an extra £1billion in higher bills each year.

Such has been the rush of businesses and individuals piling into the scheme that the level of payments - paid for by a levy on household electricity bills - jumped from £9.2million in 2010/11 to £128.3million in 2011/12, according to figures compiled by energy regulator Ofgem .

In August 2011 it was reported that prime minister David Cameron’s father-in-law Sir Reginald Sheffield earned almost £350,000 a year from wind turbines sited on his Lincolnshire estate.

“The report from the Public Accounts Committee shows why tough, independent scrutiny is vital when the government negotiates multi-billion pound contracts with the energy industry,” said Richard Lloyd, executive director of consumer champion Which?.

“Rising energy costs are consumers’ number one financial worry, so with customers footing the bill for investment in our energy system through their bills, it is important costs are kept under control.

“As MPs start to scrutinise the government’s energy bill this week, we want to see amendments to ensure contracts for new energy supplies are scrutinised by independent experts, including consumer representatives, so we can be sure they deliver good value for money.”