The PAC report claims the deal had “been designed almost entirely to attract investors at the expense of securing a good deal for consumers”, with investors expecting to see annual returns of 10-11 per cent over 20 years.
However, advocates of the scheme insisted it had attracted much needed investment into UK infrastructure at a time when it was needed, while still representing saving to the consumers.
Financial advisors involved in the deal claim the bidding process, which pitched six bidders against each other, ensured the best value deal was chosen. Ofgem said not only was £1.1 billion of investment found during a global financial crisis, but the process also saved at least £290 million.
Maf Smith, deputy chief executive at RenewableUK said it was “regrettable” the PAC report failed to state the primary aim of bringing in investment was met.
However, SSE said it had “never understood” why a different tender mechanism was used to that for onshore assets, which had been successful. A spokesman said: “We are therefore not surprised that the Committee has concluded that there is no benefit to consumers from this approach.”
Audrey Gallacher, director of energy at Consumer Focus, also slammed the licensing regime, saying it would encourage investors but not necessarily efficient competition or affordable energy.
Ofgem is currently running a consultation on the tender
process, and is proposing to keep the 20 year licence period. The regulator is
also gauging opinion on whether a refinancing gain share mechanism should be
introduced, and is examining alternatives to the current Retail Prices Index (RPI)
linked revenue stream should be changed.
The consultation closes on Friday 22 February 2013, and
responses should be sent to offshore.enduring@ofgem.gov.uk