BEIS under fire for green cuts

Poor governance of the Levy Control Framework (LCF) led to quick corrective action that “unnecessarily undermined investor confidence” in renewables, according to the Public Accounts Committee (PAC).

The LCF sets yearly caps on the forecast costs of the Renewables Obligation (RO), feed-in tariffs and Contracts for Difference.

In its ‘Consumer-funded energy policies’ report, the PAC said the LCF has “suffered from a lack of transparency, rigour and accountability” and forecasting of its costs has been poor.

The PAC said better forecasting might have avoided the need for “abrupt scheme changes” it made in 2015 to cut costs.

The changes included closing the RO to wind and solar projects a year earlier than previously expected, and imposing caps on feed-in tariffs.

Despite the cuts, annual household energy bills will be £17 higher in 2020 than they would have been if BEIS had stayed within its budget.

The PAC said the problems with forecasting reflected a “culture of optimism bias” and recommended the government reports more openly and regularly on the LCF and publish a consumer prices and bills report annually.

The next edition should be published before April, it added.

The report also recommends the Treasury sets out in detail how the future LCF or its successor will operate.

The LCF currently only sets out budgetary limits as far as 31 March 2021.

Energy and Climate Intelligence Unit energy analyst Jonathan Marshall said: “This report is the latest instance of clumsy policy turning a UK success story into negative news. 

“An inability to adapt and keep up with the pace of change in low-carbon technology, sub-par forecasting and incessant policy changes are having an unwelcome effect on customer bills.”

Image: UK  parliament (FreeImages)