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 285.

    @255 "We had an excellent Electricity Generation and Distribution Network until it was privatised by the Tory idiot Major."

    Incorrect!

    Thatcher was in power when the 1989 Electricity Act was passed.

  • rate this
    -1

    Comment number 284.

    if nuke power is green then coal must be greener. before nuke material can be used has to be processed which creates more crap than burning coal then there's the waste that comes out the other end nuke green really ?

  • rate this
    0

    Comment number 283.

    energy, jobs, carbon emission, housing, cost of living - all problems can be solved by simply controlling the population. too bad no gov will ever address the elephant in the room because dear economists told them that fewer people would mean less GDP - the ultimate wild goose chase.

  • rate this
    +1

    Comment number 282.

    When boiling water for a cup of tea, only use enough water for a cup of tea. How? Pour the cold water into a cup, then pour that into the kettle,
    then boil. Simple.

  • rate this
    +1

    Comment number 281.

    Government should promote solar power for every house in UK. Quality can be assured by an assurance scheme like the one used in new house building, the NHBC. This will allow household trust on solar installers doing the job properly. This will remove pressure to new power stations, letting them only to supply commercial premises.

  • rate this
    +12

    Comment number 280.

    Energy saving technology comes along - people use less energy - companies see that and put prices up to cover their year on year imagined profits.

    Until that is addressed the people will just get screwed again and again.

    So either re-nationalise or make them non-profit.

    But that takes a government genuinely working for its people & not in the pockets of big business interests.

    This ain't it.

  • rate this
    +1

    Comment number 279.

    Candidly, I would renationalise all the utilities and rail. These aspects of daily necessity should be run by the state for all the people. instead of having all these rip off merchants fleecing the system.

  • rate this
    +3

    Comment number 278.

    Just one more reason to strip the overseas energy cartel of their licenses and nationalise these utilities.

    But that won't happen, instead we will give this same cartel full ownership of shale gas reserves too, and they will charge us sky high prices for the energy produced, while we pay for all the infrastructure via our taxes.

    We are being robbed.

  • rate this
    0

    Comment number 277.

    Politicians need to wake up and smell the coffee.
    People in this country need as low as possible energy bills now.
    The UK needs as low energy costs now, so as to be able to compete globally.
    We need to invest in both fracking and nuclear power now.
    It is a disgrace that open toed enviromentalists are able to con politicians, when ordinary people know the solution

  • rate this
    -1

    Comment number 276.

    The gas & oil companies want us tied to their grids as a captive market. Putting them in charge of green technology was like putting steam boilermakers in charge of oil drilling. Global energy "crisis" is manufactured but switching to hydrogen economy economic power to the 3rd world and away from Corporations. Look at Venezuela once Oil was nationalised

  • rate this
    +2

    Comment number 275.

    " pandatank
    Tell me what nuke waste comes from FUSION?"

    Actually, there is some as neutrons get absorbed in the shielding of the containers holding the plasmas. It is at a lower level than fission but still something that has to be dealt with in the design and implementation. If you visit JET at Culham, there are massive concrete walls surrounding the reactor to absorb the radiation.

  • rate this
    +1

    Comment number 274.

    @255.Laud Sprowston, very easily, you remove thier licence to operate in the uk and issue a compulsary purchase order for all equipment/land etc for pennies in the pound, all you need is to stack the lands tribunal which shouldnt be hard for a government. If taken to the European court you simply ignore the result and tell them to get stuffed.

  • rate this
    +9

    Comment number 273.

    In a world where people want to flick a switch and expect something to work, renewable energy can't be relied upon. Sooner or later, we'll need to move away from coal, but renewable energy on its own isn't fit for task. It needs to work in conjunction with a reliable power supply in order to tap the best out of both.

  • rate this
    +1

    Comment number 272.

    251.Rich
    Just now
    We will, eventually, via evolution of technology, become less dependent on fossil fuels. Why on Earth, should we pay for something based on a myth that is designed to create money via tax (this article).


    ++
    Dreamer. LOL, dont you understand, ANY future energy source WILL be TAXED, to suggest otherwise is pure fantasy, we are EVEN taxed to apparantly subsidise FREE wind

  • rate this
    -2

    Comment number 271.

    @trust me I'm a Tory mp

    Yes I get that. If you actually read my post you will see I made no reference to UK coal the organisation. I was using a generic term to reference each element (i.e. mine) under the NCBs domain. My aim was to simplify the language for the audience. Even though it would seem that i have overestimated some of them. Pictures may be a better approach moving forward.

  • rate this
    +1

    Comment number 270.

    So I use energy saving bulbs, switch everything off possible every night to reduce my bill. This of course affects profits and hey presto I am back to square one. Problem we have it is the cabinets pals who run the companies and milk us for all they can get. Renationalise gets my vote.

  • rate this
    +3

    Comment number 269.

    Though harnessing nature's energy is probably a fine art, it would seem logical to give households more access solar panels and other energy producing technology, which is currently used in other larger-scale environments.

  • rate this
    +1

    Comment number 268.

    Energy companies should be made not-for-profit organisations, with professionally managed and executed independent audits to ensure quality and compliance.
    Tariffs and salaries must fall within guidelines.

    Investment & maintenance surcharge should be transparent, as should work performed for that money.

  • rate this
    0

    Comment number 267.

    234.nugget
    Why do we only seem to get media coverage of the centre right parties


    This is where the BBC are supposed to play their part as a public service broadcaster

    Sadly they don’t

    They now peddle as much nonsense as the Sun news paper

    This for me is very disappointing

  • rate this
    0

    Comment number 266.

    Whatever happens, the energy companies will find a way to ALWAYS increase bills. It matters not how efficient things get. If we all reduce our consumption by half, they will just eventually double their prices. It is just capitalism at work, they have shareholders to please and boy those 100ft yachts take some looking after... In the industry it's known as the "Ratchet" with the accent on the Rat.

 

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