UK: Energy bill rises blamed on green policies

Energy bills will rise because of Government policy says RWE npower

Energy bills will rise because of Government policy says RWE npower - Credit: Michael Ward

Household energy bills will rise £240 a year by 2020 due largely to the mounting cost of government green policies, energy giant RWE npower has warned.

The “big six” power provider claimed energy company profits were not to blame for rising bills and said consumers should know the true cost of government investment in greener forms of energy production and efficiency programmes, which it said will be the main driver behind a hike in bills from £1,247 today to £1,487 by the end of the decade.

Paul Massara, npower chief executive, said: “Government policy is rightly delivering the transformation we need to address the UK’s poor housing stock and encourage investment required in new infrastructure - but achieving these aspirations comes at a cost, and this is what needs to be clearly communicated to consumers.

“The fact is that if people don’t take action to reduce energy consumption, their bills are going to rise.

“If we can’t be upfront about that, we won’t be able to convince people to make big changes to be more energy efficient.”

RWE npower said support for low-carbon technologies alone would add £82 to the average energy bill by the end of the decade, up from £34 this year, and £12 in 2007.

The cost of investing in low-carbon power sources accounts for less than 3% of the average household bill, but this will rise to 5.5% by the end of this decade, it added.

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Meanwhile, energy profits have risen from £18 on the average dual fuel bill in 2007 to £59 this year and npower predicts that profits will rise to £71 in 2020, staying constant at around 5% of the bill.

Greg Barker, minister for energy and climate change, said of the npower report: “Global gas prices, not green policies, have been primarily pushing up energy bills.

“That is why it is vital we crack on with securing investment in a diverse energy mix that includes renewables and new nuclear, as well as gas.

“We must also continue to drive up the energy efficiency of the nation’s housing stock, particularly the homes of the most vulnerable households.”

He said government policies were keeping bills lower than doing nothing, with a typical household saving £65 today and £166 by 2020, compared with if the UK remained reliant on fossil fuels, failed to tackle climate change and did not make homes more efficient.

A separate report also found that while Britons are prepared to pay for a shift to renewables, they do not trust the Government or power companies to deliver a clean, secure and affordable energy system.

More than four-fifths (82%) of people surveyed as part of wider research into changing the UK’s energy system are worried about the country becoming dependent on energy from other countries.

Almost as many (79%) want to see a reduction in fossil fuel use in the next few decades and a similar number (81%) would like to reduce their energy use, the poll of 2,441 people revealed.

Support for renewables among the public is strong, with 85% backing solar power and 75% in favour of wind despite controversies over the technologies, and three-quarters of those polled (74%) were concerned about climate change.

But power companies and the Government are not trusted to deliver what people wanted: an efficient, non-wasteful energy system that was affordable, fair, protected the environment and did not infringe on personal choices.

While the cost of bills was an important issue, people did not just want the cheapest energy system that did not address all the other concerns they had.

And mistrust was generated when people were told bills would go up to pay for clean power, and then saw “big six” profits soar, the researchers warned. The Government was seen as untrustworthy due to mixed signals about energy policy.

Researcher Dr Catherine Butler said: “If Government or energy companies are saying your bills are going up because of renewables, that isn’t necessarily going to be taken on trust.”

She added: “There’s a real sense of anger about the profit-making nature of energy companies when it’s seen as a basic need, not a consumer good.”

Alex Laskey, president of Opower which works with power companies to save consumers money on their energy bills, said suppliers needed to rebuild trust with their customers.

“The relationship between the big six and customers in the UK can’t be salvaged and completely repaired overnight,” he warned.

But he said there was a “tremendous strategic advantage” for a company to come out and say it was going to do things differently and give householders the tools and information they needed to save energy and money.