An estimated annual return of 10 to 11 per cent on infrastructure to connect offshore windfarms to the electricity grid is high given the limited risks, the report said.
The committee noted that the first six offshore transmission operator (Ofto) licences had been awarded to two companies. Government and regulators must do more to make sure the market is competitive, it said.
“Not only is it unlikely that this new licensing system for bringing electricity from offshore wind farms onto the national grid will deliver any savings for consumers, it could well lead to higher prices,” said chair Margaret Hodge MP.
“Indeed the terms of the transmission licences appear to have been designed almost entirely to attract investors at the expense of securing a good deal for consumers.”
Although no public funds are involved, costs of around £17 billion will be passed on to bill-payers.
The Department of Energy and Climate Change and the Gas and Electricity Markets Authority had “ignored vital lessons” from previous private finance initiatives in setting the terms for Oftos, she said.
The committee called for higher fines than the current 10 per cent of annual turnover to be available if Oftos failed to deliver.