Report published 8 February 2017. Government response published 28 March 2017.
Scope of the inquiry
The Levy Control Framework is a valuable tool for supporting control of costs to consumers arising from government energy policies, but it has not been fully effective in key areas.
In establishing the Levy Control framework, the Government has rightly recognised the importance of monitoring and controlling the considerable cost of energy schemes that consumers fund through their energy bills.
National Audit Office report
However, in a recent NAO report, it has been reported that the government has missed opportunities to exploit the full potential of the Levy Control Framework and this has contributed to decisions which have not secured value for money.
The Levy Control Framework, established by the former Department of Energy & Climate Change and HM Treasury, set a cap for the forecast costs of certain policies funded through levies on energy companies and ultimately paid for by consumers. Since November 2012, the Framework has covered three schemes to support investment in low-carbon energy generation: the Renewables Obligation, Feed-in Tariffs and Contracts for Difference. It sets annual caps on costs for each year to 2020–21, with a cap of £7.6 billion in 2020–21 (in 2011–12 prices).
According to the latest forecast, the schemes are expected to exceed the cap and cost £8.7 billion in 2020–21. This is equivalent to £110 (around 11%) on the typical household dual fuel energy bill in 2020, £17 more than if the schemes stayed within the cap.