“We are concerned that the complexity and changing nature of the policy landscape affecting infrastructure investment, particularly in the energy sector, may be causing investors to hold back from making investment decisions,” said a report by the Public Accounts Committee (PAC).
“For example, we heard that although there is planning consent for infrastructure that would provide 15 gigawatts of gas-powered electricity generation, investors are not going ahead due to a combination of unfavourable market prices for gas and electricity, and lack of certainty with regard to the government’s electricity market reforms.”
The report urged the Department of Energy and Climate Change to act quickly to give certainty to investors, adding that its “lack of urgency” would lead to a rise in energy bills.
The government forecasts that average household energy bills will be 18 per cent higher by 2030.
The UK’s energy sector is currently undergoing a major overhaul, amid a public furore over rising costs and fears of a supply squeeze towards the middle of the decade that could lead to blackouts.
City analysts and industry figures have warned that confusion over energy policy could seriously hinder investment into the sector, as ageing coal and nuclear plants went offline.
The Treasury reckons that £375bn is needed to fund planned UK infrastructure investment across all sectors, including energy, water and transport.
Two-thirds of this will be funded by consumers through utility bills and user charges, such as rail fares.
The PAC report is calling for an independent assessment of the long-term affordability of this infrastructure investment on consumers’ bills and wants regulators to work together on the issue. Trade body Energy UK welcomed the call for an assessment.