UK's National Audit Office (NAO) has begun a review of spending under the Levy Control Framework (LCF), which limits costs of renewable electricity subsidies to consumers, to examine its effectiveness and impact on wholesale energy prices.
"We will review how effectively the Framework has met its objectives to date, and how well placed it is to meet these objectives in the future," the government's financial watchdog said in a letter dated February 15 in response to the Energy and Climate Change Committee.
The LCF is part of government reforms to control consumer energy bills stemming from the UK's move towards a low carbon economy to meet renewable energy targets.
The government said last year the forecast spend on renewables energy subsidy schemes would be higher than expected, increasing the future spend under the LCF to around GBP11.4 billion in nominal terms by 2020/2021, up from GBP9.1 billion in 2011/2012 prices.
This sparked concerns of overspend under the LCF, resulting in the UK Department of Energy and Climate Change ending some renewables subsidies, including support for onshore wind and carbon capture and storage.
The ECCC said fears of overspend on the LCF have led to the DECC reducing funding commitments to clean energy but consumers continuing to pay higher prices for their electricity.
The NAO, in its letter, also said: "We will examine the reasons for changes in forecast expenditure and how the [energy department's] governance, quality assurance and reporting arrangements have changed in response to recommendations in our 2013 report on the Framework."
The NAO said it may not be feasible to carry out a detailed analysis of the LCF spend impact on wholesale energy prices, but plans to assess if DECC "has a good understanding of these impacts, and whether this accords with independent research by academics and energy analysts."
The NAO expects the review to be complete by this summer, it said.
