Government rule changes to the way contracts to “green” energy suppliers were awarded will add £100 million-a-year to electricity bills, the Whitehall spending watchdog has found.
The National Audit Office (NAO) said the total additional cost to the consumer over the 15-year life of the 11 contracts awarded in the auction of September 2017 will be around £1.5 billion.
The Department for Business, Energy and Industrial Strategy (BEIS) introduced the changes to the process to encourage more flexible bids.
However the NAO said that it failed to test whether there could be “unintended consequences” from the move.
The result was that some smaller, more expensive projects were awarded contracts ahead of projects generating more electricity but at a cheaper price per unit.
“The department recognises that this means the outcome of the auction was suboptimal,” the NAO said, adding that it had agreed it would not apply the rules in the same way in future auctions.
Meg Hillier, the chair of the Commons Public Accounts Committee, said: “Once again the department has neglected to put the interests of service users at the forefront of its thinking.”
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