Green policies will drive a £240 rise in energy bills by 2020 unless households cut their power consumption, npower has warned.
The energy giant says it wants to tackle the “myth” that suppliers are to blame for rising bills, after finding consumers believed they made far higher profits than they actually did.
A household’s energy bill will rise from £1,247 today to £1,487 by 2020 in real terms – not taking into account inflationary increases – if usage remains static, npower warns in a report. Costs caused by government policies such as subsidies for new wind farms and energy efficiency schemes will be the main driver, adding £144, it claims.
Paul Massara, npower chief executive, said a “blame game” between suppliers and the government had led to “confusion, mistrust and misinformation”.
Consumers believed energy firms made a 40pc profit margin and were to blame for rising bills when “in fact, our profits are more like 5pc and the main factor behind rising costs is government policy and regulation”, he said.
Mr Massara said he actually supported the government’s policies but wanted consumers to know their true cost and to understand that “if people don’t take action to reduce energy consumption, their bills are going to rise”.
The report finds that the costs of upgrading Britain’s ageing gas and electricity networks would be the next biggest driver of bills, adding £114, while the costs of the nationwide roll-out of “smart meters” that send automatic meter readings back to suppliers will add £24.
Profits will account for £71, or just under 5pc, of the bill by 2020, up £12 from today, but a significant jump from £18 in 2007.
While ministers and energy companies have both blamed rising commodity costs of gas and electricity for price increases to date, the report suggests they have been only a modest influence on bills, adding £51 since 2007, while government policies have added £110 over the same period.
Controversially, npower also predicts that commodity prices will actually fall back to 2007 levels by 2020. The company says its analysis is based on the Government’s own figures but strips out the impact of the Treasury’s carbon tax, which will push up power prices and which npower counts as a policy cost.
Ministers insist their drive for nuclear plants, wind farms and energy efficiency schemes will save consumers £166 by 2020 compared with the costs of doing nothing. But critics have pointed out that relies not only on the carbon tax inflating the costs for gas-fired power but also on households spending thousands of pounds on energy efficiency measures.
Greg Barker, the energy minister, said: “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.”
|Wind Watch relies entirely
on User Funding