Energy firm warns bills to rise by more than government forecasts

 
Wind farm in Barrow in Furness RWE Npower says it supports government plans to invest in renewable energy

Related Stories

Annual household energy bills by 2020 are likely to be £100 higher than government projections, says energy firm RWE Npower.

It says official predictions of future energy savings are over-optimistic and warns the annual average bill will be £240 above current levels by 2020.

The firm says it supports government plans to renew power networks and build more renewables such as wind and solar.

But it says there must be more honesty about the costs of this investment.

It comes as a new poll by Cardiff University suggests that the public is willing to pay extra for clean and reliable energy.

'Heroic assumptions'

Start Quote

What's interesting is that, despite what you might see in parts of the media, it's clear that very broadly the public want a long-term commitment to clean energy”

End Quote Professor Nick Pidgeon Cardiff University

Both reports acknowledge, though, that the public does not trust energy firms or government - and both say trust must be restored if energy policy is to succeed.

In Npower’s case, the trust exercise starts with a publication setting out exactly how bills are likely to rise in order to renew the creaking energy supply system and install clean energy supplies.

The firm says it believes the government has underestimated the effect of this investment on bills, because its calculations rely on “heroic” assumptions about the energy individuals will save through efficiency and behaviour change.

This criticism has frequently been levelled at the government’s projections.

The firm warns that unless people strive much harder to reduce energy use, the average combined fuel bill in 2020 will be about £1,487 a year - that's £200 more than now and £100 more than the government projects.

The company says it is essential for energy firms - often accused of profiteering and misleading customers - to be honest about future bills.

'Blame game'

The new chief executive of Npower, Paul Massara, said: “Energy costs are rising. This is an indisputable fact, and it’s time that all of us involved in energy in the UK are upfront about it.”

He went on: “We are very clear that we do not want to be critical of government - rather, we want to ensure customers have the facts, so that they understand that for this cost, they will get a low-carbon economy, security of supply and warm, insulated homes.”

He said his firm was calling for an end to the energy “blame game”.

Public views on renewable energy

  • 82% worried about fossil fuel import dependency
  • 79% keen to reduce fossil fuel usage
  • 85% supportive of power from the sun
  • 75% supportive of wind power
  • 74% concerned about climate change

Source: Cardiff University

The report is issued coincidentally as the academic body, the UK Energy Research Centre, warns that plans for a clean energy future risk being undermined by lack of trust.

A poll of about 2,500 people commissioned through Cardiff University suggests that the public is worried about dependency on fossil fuel imports (82%); keen to reduce use of fossil fuels (79%); supportive of power from the sun (85%) and wind (75%); and concerned about climate change (74%).

The report’s authors say people are willing to pay extra to obtain a stable energy supply. The lead author, Prof Nick Pidgeon, said people would also pay more overall to avoid sudden peaks in prices. He said the researchers had not tested specific figures in the poll because projections about future energy costs were “notoriously slippery”.

Keeping the lights on
Floodlights at a football match The government says its policies will prevent blackouts

“What’s interesting is that despite what you might see in parts of the media, it’s clear that very broadly the public want a long-term commitment to clean energy,” he told BBC News.

“But the trust issue is critical. We have seen protests round energy system developments like wind farms over recent years. There won’t be all the investment that’s needed on energy systems if the energy firms and the government can’t persuade people to trust them.”

He said young people dependent on electronic gadgets were very worried about the prospect of black-outs and willing to pay to avoid them.

But he envisages a Catch-22 in which the government and energy firms fail to deliver the energy future that people want, because the public don’t trust them.

'Claims'

The Association for Conservation of Energy is one body that does not trust the firms.

Its director, Andrew Warren, told BBC News that Npower's projections on energy savings could not be trusted: "The big energy companies have definite form, when they start warning that they can't deliver the energy savings schemes that government mandates at the price that government projects.

"They claim at the start that the scheme will cost them far more than the official forecasts, in order to try to minimise the size of the obligation placed upon them."

The government said its policies would keep the lights on and help to smooth bills by reducing dependency on the gas imports that have caused recent jumps in energy prices.

Greg Barker, Minister for Energy and Climate Change, said: “It is right that we have a grown-up discussion about the impact of energy investment. However, global gas prices, not green policies, have been primarily pushing up energy bills.

“In 2020, bills will be £166 lower than they would be if we left ourselves exposed to global price shocks, left our homes leaking energy, and left future generations to deal with climate change.”

Follow Roger on Twitter @rharrabin

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -7

    Comment number 25.

    Wind power only works when it is windy.
    So we have to plan for no wind.
    So we have to build more capacity than we need.
    So it is more expensive overall. Simple really.
    All this guff about the fat cats may make readers feel good about having an object of hate but doesn't actually address the issues.

  • rate this
    +4

    Comment number 24.

    Selling off to private companies the utilities that are a fundamental necessity for everyone was an evil decision at the time and remains so now. Typical government short term planning, money in the bank now and no thought for the future.

  • rate this
    -23

    Comment number 23.

    You are aware that WE are all to blame for this? With our constant need for energy to charge our phones, power our TV's, fridges and freezers. Power our cars, light our homes. Our mass consumption has meant we have drained the earth and now are desperately scrabbling around to fix it.

  • rate this
    +32

    Comment number 22.

    What people seem to forget is that for as long as I can remember, part of all energy bills paid were for future investment so where has this money gone, the energy users of this country are basically paying twice for the same energy

  • rate this
    +36

    Comment number 21.

    From The Telegraph:
    "npower profits soar despite loss of 70,000 customers
    "Big Six" energy supplier npower's annual profits soared 25pc after customers turned up the heating in the cold weather."

    So much for Privatized monopolies.

    You get what you vote for ...

  • rate this
    +2

    Comment number 20.

    So give me a home with a fireplace again then I can burn all the waste that my council won't recycle.. Am sick of trying to save energy when office blocks, hotels and businesses all over the country leave lights blazing all night long. Why should I, a pensioner, be made to pay for their waste? Renationalise all fuel companies for a start and have more transparency in profits.

  • rate this
    -1

    Comment number 19.

    Yes: going 'green' will cost, but what is the cost of having low lying coastal areas flooded ?

  • rate this
    +37

    Comment number 18.

    With the advancement in modern day technology ..... I always thought that Enerygy costs should have gone down instead of going up.

    No wonder "public does not trust energy firms or government".

  • rate this
    -8

    Comment number 17.

    Existing oil extraction has peaked, oil fracking is hideously expensive, gas fracking will never deliver enough to replace oil and, although there is plenty of accessible coal, burning it cleanly will be costly. One does not need the brains of Einstein to work out that power costs will rise rapidly and that the magic of 'growth' is a thing of the past!

  • rate this
    +4

    Comment number 16.

    Predicting energy price rises is on a par with predicting that the sun will rise in the morning and set in the evening!

  • rate this
    +5

    Comment number 15.

    Energy bills are going up - well, there's a surprise!!

  • rate this
    +1

    Comment number 14.

    Shameful shameful! people cant even afford to put food on the table! food banks popping up faster then a virus and they think its a good idea putting energy bills up!? its mind boggling and shows just how out of touch these people are!!!!! I wonder if people realise we are one of the highest energy bills in the EU if not the highest?!

  • rate this
    +3

    Comment number 13.

    Cost of energy may well rise but not by as much as the energy companies' profits!

  • rate this
    +3

    Comment number 12.

    Energy bills must go up, anyone who argues against this misses the essential point:

    Ordinary families must be squeezed for every penny, otherwise the directors won't be able to justify their bonuses.

  • rate this
    +3

    Comment number 11.

    Energy bills in the UK will rise a lot faster than the rest of the EU regardless of supply. Simply because we have sold off our energy companies to the EU and they will now make us pay dearly for that mistake (Look at Scottish Power).
    Certain things should be under public ownership and energy supply is one of them.

  • rate this
    +2

    Comment number 10.

    USA new found energy resources are huge. Adding oil production to that similar to Saudi Arabia and also massive fracking gas exports should effectively have a downward effect on world energy prices over coming years

    Thats how markets work, thats how politicians & energy companysalways explain price rises - supply & demand.

    Supply & reserves have increased, prices should FALL accordingly

  • rate this
    +80

    Comment number 9.

    No, greedy profit driven companies mean higher bills, and government incompetence has scuppered long term planning. The rest is bull. Privatisation was the worst thing that ever happened to the energy industry in this country.

  • rate this
    +54

    Comment number 8.

    Disgusting - These firms should be closed down and the operations brought back into Public ownership like all utilities, there is obviously not enough profit at shareholder level it seems

  • rate this
    +48

    Comment number 7.

    Shock horror it's another rip off.
    Energy companies are making millions by trading electricity and gas but benefits are never passed on to us as they use artificially high prices to sell to the retail arm of the business - most allegedly lose money on supplying customers but more than make up for it on the markets as they control supply.
    Yet more private profits & public losses, it hurts everyone.

  • rate this
    +67

    Comment number 6.

    Well, this will come as no surprise to many of us.

    Am I the only one who is sick and tired of the rising cost of living and being expected to just keep paying with an ever decreasing amount of income?
    This cannot continue like it is, something has to give

 

Page 35 of 36

 

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.