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Decc failed to get value for consumers, MPs say

Offshore wind turbine Image copyright Getty Images

The government's decision to award billions of pounds of renewable energy contracts without a proper tendering process has left consumers out of pocket, MPs have said.

The Public Accounts Committee said the Department of Energy and Climate Change failed to protect consumers' interests.

The five offshore wind and three biomass project contracts were awarded without competition to avoid delays.

MPs said Decc's own case showed no benefits to awarding contracts early.

They added that it was not clear if the early contracts were needed in order to meet 2020 renewable energy targets. The government has set a target of producing 15% of the UK's energy from renewable sources by this date.

Failure

The contracts involved a guaranteed "strike price" that the renewable energy producers would receive for the energy that they produced. This strike price was linked to inflation, with consumers picking up the bill if inflation rose when the projects were completed.

The MPs criticised the government for failing to challenge developers' claims that the projects would not go ahead without consumers taking on part of the risk.

"By awarding contracts worth up to £16.6bn to eight renewable electricity generation projects without price competition, Decc failed to adequately secure best value for customers," said committee chairwoman Margaret Hodge.

"Yet again, the consumer has been left to pick up the bill for poorly conceived and managed contracts."

Keeping the lights on

Energy and Climate Change Secretary Ed Davey defended the way the contracts were awarded "This Government has been dealing with a legacy of chronic under-investment and neglect in our energy system", he said.

"To keep the lights on in British homes and businesses we needed to move quickly to secure new capacity and give investors confidence - fast.

"These contracts are better for bill-payers in the long run because it means that we're able to move to real competition for contracts much faster."

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