She was responding to a Memorandum from the National Audit Office, which considered “The government’s long-term plans to deliver secure, low carbon and affordable electricity.” Hodge said, “This report shows that the government has major challenges to overcome if it is to deliver on its long term energy goals”.
She said that all the options for replacing current power stations were “problematic”. Green technologies were “yet to be proven” while for the nuclear option “the long build time and high capital … present real problems”. She said her Committee would seek assurances from Decc that it would spread the costs of its policies fairly.
In its report the NAO found structural weaknesses in Decc that could hamper delivery of its programmes – which include the switch to smart metering as well as changes to the electricity market.
Decc had identified in 2009 that “its staffing, capability and skills are a material risk to meeting its objectives,” because it had to change from a policy organisation to one managing a large and complex delivery programme. It has recruited over 100 specialists since April 2011, but in May a review found more work was required because, the NAO report said, Decc still did not have the capacity to deliver all of its current programmes.
Questions were also raised over Decc’s ability to handle the risks and uncertainties of implementing several complex programmes. On risk monitoring, the NAO said Decc “focused on the highest risks to meeting its electricity objective” suggesting it had not been able to fully explore potential interactions between various parts of the electricity market reform. The NAO noted that Decc’s focus on the highest risks has been at the expense of early detailed consideration of lower level risks, such as overspend on feed-in tariffs.
This month Decc introduced new risk management procedures including a permanent risk coordinator.
NAO said that when the Major Projects Authority reviewed Decc’s programmes “it noted the uncertainties associated with energy prices and construction costs”. The Authority said “the realisation of short-term deliverables from electricity market reform appeared feasible. However, it concluded that the achievement of security of supply, decarbonisation and affordability of electricity appeared doubtful given the early stage of the programme and uncertainties involved”.