Close down DECC
Oct 3, 2014
Bishop Hill in Climate: Parliament, DECC, Energy: grid

The Commons Public Accounts Committee has issued a report about the award of renewables contracts. It is not a pretty sight.

By awarding early contracts worth up to £16.6 billion to eight renewable electricity generation projects without price competition, the Department of Energy and Climate Change (the Department) failed to adequately consider how to secure best value for consumers. In committing 58% of the total funds available for renewable contracts under these transitional arrangements, the Department has severely constrained the amount available to be awarded under new arrangements through price competition, reducing the opportunity to test the market and secure the best value for consumers. Under the terms of these contracts the Department failed to defend consumers’ interest. For example, the risks associated with inflation will be met by consumers with inflation measured on the Consumer Prices Index. At the same time any benefit from excess profits will be retained by the developers as there are no claw-back clauses.

This is rotten timing for DECC, coming as it does, hot on the heels of yesterday's announcement that the official predictions of future oil and gas prices have been slashed; as I noted in yesterday's post, the policy of successive governments has been based on the assumption that oil and gas prices will rise every year.

As we look at UK energy policy now, DECC has had the country make a massive financial gamble on the back of a prediction that was wholly unfounded and which has been obviously so for many years. We now learn that DECC has also distributed this astonishing wave of public money in a manner that can only be described as monstrously incompetent, and which many will assume to be monstrously corrupt. And to top it all, no lessons have been learned at all, as the preposterous contract for the new Hinckley Point nuclear power station clearly demonstrates.

Any reasonable person would close down DECC right now and lay off all the environmentalists who staff it. This being the public sector, it goes without saying that nothing of the sort will happen: nobody will be held responsible and no lessons will be learned. The department will simply award everybody involved a bonus for good performance and they will carry on as before. There is simply nothing anyone involved in UK energy policy can do that will have any repercussions for them.


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