National Audit Office predicts greater energy sector investment

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The ongoing political debate about the affordability of renewing energy infrastructure continues and the rising cost of living, particularly rising consumer energy bills, gains more traction as energy suppliers announce price increases. The National Audit Office has added to this by publishing their report on the UK’s investment needs for infrastructure and potential impacts on consumers’ bills.

The report covers major infrastructure planned across the energy, transport, water and telecoms sectors, identified in the 2012 National Infrastructure Plan. Total cost is put at £310 billion with £176 billion for the energy sector alone. 67% of this investment is expected to be financed privately and repaid through household bills, of which the aggregate financial impact, across all sectors, is currently unknown.

Specifically on energy, the report highlights the need for a 3.7 fold increase (on 2012 levels) in the proportion of energy from renewable sources required by 2020 in order to meet our legal obligations. The estimated increase in the average household energy bill, in real terms, from 2013 to 2030 is put at £221. The report highlights the Department of Energy and Climate Change (DECC) central case projection on energy bills, put at 18% in real terms by 2030.

It also raises a concern of an apparent difference between the amount of energy sector investment identified in the National Infrastructure Plan and the amount the department’s models predict is required to meet government aims. DECC’s models apparently predicting only around three quarters of the level indicated under the infrastructure plan.

The head of the National Audit Office, Amyas Morse, commented: Government and regulators do not know the overall impact of planned infrastructure on future consumer utility bills, or whether households, especially those on low incomes, will be able to afford to pay them.”

The full Report or Executive Summary can be downloaded here.

For more information, help or advice please contact Andrew Davison on 0191 211 7950.