HS2: Electricity Supply

Viscount Ridley Excerpts

Tuesday 26th February 2019 Lords Chamber

Asked by

[Viscount Ridley]

To ask Her Majesty’s Government whether HS2 Ltd will fulfil the requirements of public procurement regulations by obtaining its electricity supply through transparent and competitive tendering; and if so, how.

[Viscount Ridley (Con)]

I beg leave to ask the Question in my name on the Order Paper, and refer to my interests in the register.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, HS2 will identify a suitable partner to supply electricity for the operation of the railway through a transparent and competitive process, in compliance with the Utilities Contracts Regulations 2016. HS2 Ltd is in the process of undertaking a strategic assessment of electricity sourcing options, and will produce a fully costed business case, which will then form the basis of a recommendation to the Department for Transport.

[Viscount Ridley]

I thank my noble friend for that encouraging reply. HS2 will have a gargantuan appetite for electricity—about 3 terawatt hours per year, or 1% of the entire UK electricity demand—costing several hundred million pounds per year. She will be aware of a recent report from KPMG to HS2 Ltd, which recommended that HS2 do a sweetheart deal with the wind industry to build new wind farms specifically to supply the railway, though not necessarily along the line, with a hidden subsidy, the cost of which would be passed on to the traveller and/or the taxpayer. Can she confirm that this would break the rules on public procurement?

[Baroness Sugg]

I thank my noble friend for his question and I share his desire to ensure good value for money for taxpayers and indeed passengers. The advice given in the KPMG report is that while the wholesale price for electricity is forecast to increase over the long term, the price of renewable energy is coming down, so it recommended signing a long-term contract for the supply of renewable electricity. I should reiterate that the report represents only advice to HS2. No decision has been made and, before any contract is signed, HS2 will need to present the proposed energy strategy to the DfT. Whatever strategy is agreed, HS2 Ltd will be required to demonstrate that it has complied with the Utilities Contracts Regulations 2016.