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

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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

 

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  • rate this
    0

    Comment number 205.

    Some amazing comments here. WE are responsible for paying for the infrastructure and the energy we use. More of us here, using more of it. But people want to blame someone else because it costs money. If we don't pay through our bills we'll pay through our taxes.

  • rate this
    +1

    Comment number 204.

    Whenever a gadget is invented, it's considered a novelty, then a boon, then a necessity. We now have people who would find it hard to survive without mobile phones and broadband.

    This stuff uses energy. Perhaps we should wean ourselves off some of this crap and realise that we could actually live without it?

  • rate this
    +4

    Comment number 203.

    This really is getting too much, especially considering that in 2012 NPower profits rose by 34%,

    It really has got to the point where the government should step in and cap entery prices linking them to Inflation rises at most. As it is my brother and I give our eldery parents moeny towards thier energy bills each winter so they dont have to make a choice of freezing or eating.

  • rate this
    +2

    Comment number 202.

    It's still a shame we didn't invest some of our oil windfalls for the long term, and that Conservative hatred of the miners closed far too many pits. If you think climate change is not man made, or a myth, just push on with coal and shale gas.

  • rate this
    0

    Comment number 201.

    @ Rebecca riot

    Are you for real. The tax payer was losing vast amounts of money subsidising an inefficient industry so that uk coal producers could sell their product at rates comparable with other coal producing countries. Without the subsidy there would be no industry. Guess what, the subsidy was pulled and uk mines have not been able to remain competitive

    Ignoramus!

  • rate this
    -6

    Comment number 200.

    174.James Jameson
    Fund research into Nuclear Fusion and have free energy forever,

    ++IGNORANCE
    Do you know that it will take approx 50 YEARS just to move already stored nuke waste into planned new storage, that building has not even started on

    Nuke costs are NOT FREE

    In 500/1000 years, UK citizens WILL be paying nuke costs for nuke energy used TODAY & costs do NOT go down

  • rate this
    0

    Comment number 199.

    Government needs to grow a pair and take on these big utilities and if need be take into government ownership our energy including water and gas/electric. If ever more proof that privatisation only leads to higher bills then look no further !!! This has been coming for years every governments just puts its head into the sand, where is the nuclear energy spend money at home and stop overseas aid

  • rate this
    0

    Comment number 198.

    Stop overseas aid.. Nationalise Gas/Electric/Water.

  • rate this
    +4

    Comment number 197.

    Now only this week a BBC article on German renewable energy, where they have 26,000 turbines plus solar stated that a 50% of a German household energy bill comprised of renewable subsidies!! So do they really expect us to believe that our bills will be kept down by a massive increase in renewables?!! An overall national reduction in energy use is required if we are to tackle carbon emissions.

  • rate this
    0

    Comment number 196.

    Ichabod - Utilities and transport are different. It just doesn't make sense to privatise rail, water, energy. The cost of building proper infrastructure to support them is only efficient when nationalised and done for whole country with a plan over years. Private companies just don't have any incentive to do this - so they don't and we pay the cost.

  • rate this
    -1

    Comment number 195.

    Why does the government not invest in more renewable energy directly during this time of austerity? It would create jobs and put money back into the economy, help UK manufacturing and spur innovation.

  • rate this
    +2

    Comment number 194.

    And as we all know..the sainted Maggie said that competition would drive prices down !!!! So whats the problem then ??? oooopppss sorry to much sun !!

  • rate this
    +5

    Comment number 193.

    Luckily, I've just stocked up on my energy by sumitting over readings at the cheaper summer rate.

    The only way to beat these sharks is to play them at their own game.

  • rate this
    0

    Comment number 192.

    and as long as the government continue to pay twice the wholesale price to people for renewables WE will pay MORE

  • rate this
    +1

    Comment number 191.

    The news is so depressing, Fuel poverty, food poverty, housing poverty, plain old poverty and still people come here ?

  • rate this
    +4

    Comment number 190.

    Privatisation does not work. Services that were once done by the state we are told are no longer financially viable as they are costing the tax payer too much money. These services are then "given" at a knock down price to huge multinational companies, who then screw their customers for as much money as they can to pay their shareholders. Is it really saving the tax payer any money in the end ?

  • Comment number 189.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -1

    Comment number 188.

    It makes me laugh that people are more thna happy to pay premium (and grossly inflated) prices for utterly uncecessary goods such as ipads and the like, but when it comes to buying essentials they instantly start bitching and moaning (usually about the rich). It's about time you got you priorities in the right order.

  • rate this
    +1

    Comment number 187.

    I thought fracking was going to reduce energy costs - USA , UK and elsewhere ?
    It may not be green - but it won't stop most countries from using it until they have to use expensive reliable green technology (wind if its windy , sun if its sunny are requirements when you want your kettle boiled).

  • rate this
    +2

    Comment number 186.

    Given the money saved by energy companies using FREE renewable energy over using EXPENSIVE oil, gas and coal we shouldn't really be having to subsidise new wind and hydro powerplants as these are in the long term the cheaper option anyway!

    It is just the greed of the energy companies putting up bills, nothing else.

 

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