April 18, 2013 9:00 pm

Whitehall energy contract jitters revealed

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Electricity pylons stretch across the countryside©Bloomberg

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Ministers have awarded a 20-year contract worth up to £500m to a renewable energy company previously represented by a lobbyist who was working as an ad­viser to the energy department at the same time, leaked emails have shown.

Documents seen by the Financial Times show that the bid to supply electricity to government organisations has been won by Air Products, which converts waste products into energy.

Under the terms of the contract, the government will spend a maximum of £25m a year buying electricity from the company, although officials said they expected the eventual figure to be lower.

Air Products came under scrutiny last year after the Guardian newspaper re­vealed that Miriam Maes, who was acting as a consultant to the company, asked Greg Barker, climate change minister, to help Air Products lobby the government. Ms Maes asked Mr Barker to set up a meeting with the Environment Agency so she could promote the company’s bid to build the world’s largest renewable energy plant in Teesside.

Mr Barker personally asked the agency about the application, and the company subsequently secured the environmental and planning permits it needed. It is now building the $500m (£327m), 49MW waste-to-energy plant in Billingham, near Stockton.

Internal Cabinet Office emails show how nervous government officials are about awarding the contract to Air Products.

In a briefing note drawn up for the minister, they mention five questions journalists might ask about the awarding of the contract, including whether Ms Maes helped design the scheme, and what contact she had with civil servants during the tender process.

They also tell officials to be prepared to answer questions on whether Ms Maes had access to price-sensitive information because of her government role. The answers have been sent to senior Cabinet Office officials for approval. In re­sponse to questions about Ms Maes, press officers were told to say: “The procurement was undertaken in line with EU regulations. The Energy for Growth project has had no involvement with Miriam Maes.”

A government spokesperson said on Thursday: “The project has had no involvement with Miriam Maes.”

Ms Maes left the energy department in 2012, a year before the Cabinet Office contract was awarded, and before the official tender period began. She told the FT on Thursday: “I had nothing to do with this contract, I was not even aware of it.”

At the time the contract was awarded, Lisa Jordan, an Air Products manager, said: “We are delighted the Cabinet Office has agreed to purchase the power which we expect to produce at a new Tees Valley Renewable Energy facility.”

The emails reveal that officials were also concerned about the fact that the project is set to save the government an estimated £84m – just over half the £155m initially promised.

One official said the Air Products bid offered the best deal for the government of the options available. The emails show that only two companies bid for the project, suggesting there was not great demand to provide the scheme at the price requested.

Civil servants were also worried that journalists might accuse them of wasting public funds by spending money on a renewable supplier rather than a traditional fossil-fuel provider.

The document tells officials to respond to such questions by insisting that savings will be made over a longer period, because rising fuel prices will make traditional options that look cheaper now more expensive in the long term.

Air Products said it had had no association with Ms Maes since November 2011, and “she had no involvement in our bid for the contract to supply power to the Cabinet Office”.

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