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
    +5

    Comment number 525.

    233.
    shaun
    3 Hours ago

    @208... I AGREE

    Royal mail is an old dying horse that should have been shot years ago, all letters should be electronic and all parcels can be delivered by one of the endless parcel delivery firms around these days FOR HALF THE DELIVERY COST of royal mail prices, fact.
    **
    Whenever anyone ends a sentence with 'fact' (or 'FACT!') you can be reasonably sure it isn't.

  • rate this
    +19

    Comment number 524.

    You can have all the energy efficiency you like but at the end of the day the privately owned energy companies want/need to make their profit. If we halved our consumption tomorrow the result would be an increase in tariffs to make up for the shortfall. It's a no win situation for consumers.

  • rate this
    0

    Comment number 523.

    Would anyone realy want the government to buy back the power
    companies shares for £1.00. Most of the power companies shares are owned by pension funds, some by the ordinay workers, who work there, and past workers who have now retired, this could cause a big drop in
    the stock market, and peoples future earnings, how would that be fair?

  • rate this
    +2

    Comment number 522.

    Here's an idea for a reality TV show.
    Put an average family into a house with solar panels and heating and a wind turbine and see how they get on with no fossil fuel backup.

  • rate this
    -1

    Comment number 521.

    477.
    Stalin wanted power, not socialism. Russia's living standard fell sharply after 1990. Gorbachov was a revolution too; but East Europeans didn't want to swap USSR for USA.
    Russian signs now replaced by English ones, yet most trade, tourism, and their 2nd. language, is German.
    Just a change of master.
    Maybe UK needs a revolution, at least in thinking for ourselves.

  • rate this
    +1

    Comment number 520.

    Could this be the reason they are allowed to get away with it:

    High energy profits mean high divis to investors
    Many major investors are govts and insurance/pension cos
    High energy profits fund high pensions

    And who are the only ones left with generous pensions now co plans have closed? Senior civil servants, MPs, CEOs and bankers.

    So that's why! They're all in it together!

  • rate this
    +4

    Comment number 519.

    510.englishvote
    Germany has the same weather as us and is a major installer of solar power. On some sunny days their power prices are actually negative. We should be looking to have every house fitted with solar panels over the 30 years, if possible.

  • rate this
    +3

    Comment number 518.

    @514.John Smith
    It was shown in a bbc article the other day that the top 40% of households give to the system and the bottom 60% take from the system in net value.
    --

    That also shows that the 60% out-vote the 40%. So those who take more will vote for the party that offers them more.

    Once the 60% become 80%, then presumably the remaining 20% leave the country.

  • rate this
    -3

    Comment number 517.

    "John Smith
    It was shown in a bbc article the other day that the top 40% of households give to the system and the bottom 60% take from the system in net value"

    That's a rather simplistic analysis. If that top 40% had to spend a substantial part of their time growing their own food, disposing of their waste or other necessary activities, they wouldn't be able to earn what they do earn.

  • rate this
    +2

    Comment number 516.

    @494. Your free to buy shares in RWE if you want. however looking at their last dividend payments and their recent share price. i would suggest you dont. Of course in a truly nationalized energy network the [price mechanism is lost, and you quickly become unaware of how much the energy is costing you. (it will be made up of taxes as well as their set energy price)

  • rate this
    +3

    Comment number 515.

    .And the surprise is?

  • rate this
    -1

    Comment number 514.

    in response to jgm2.
    It was shown in a bbc article the other day that the top 40% of households give to the system and the bottom 60% take from the system in net value. This means that when the middle class and the rich get a subsidy for solar panels that they are just claiming a tax rebate on a small fraction of the amount that has been paid into the system by them.

  • rate this
    0

    Comment number 513.

    Another of Maggie's pidgeons - And privatisation seemed such a good idea at the time (not!) - predictably we end up with a cartel that this government - ideological worshippers of all things private, deregulated and profitable will take no action against. Ever been had?

  • rate this
    -2

    Comment number 512.

    150 - Excellent point, well made.

    Whilst we individually may be making efforts, our population continues to expand at a high rate (no small part due to immigration) the deficit created by our massive demand for energy will continue to increase.

    Also the energy companies are able to manipulate the supply of energy and therefore control its price.

  • rate this
    +1

    Comment number 511.

    I am somewhat dubious at the percentage that are supportive that we need non fossil fuel power generation and renewable's. As with all surveys it is important to know how the questions are phrased, did the questions state how much these alternative energy sources are going to cost all of us, I suspect not. If we are not careful we will sleepwalk into "Green Power at any price".

  • rate this
    -3

    Comment number 510.

    @490 xyriach

    Good link

    which shows that “globally” PV payback is close to the energy used to make the panel itself

    But we are in Britain, not Australia or California

    More importantly the study ignores the large amount of aluminum used to fit the things to roof tops

    Fitting them on British roofs uses more energy than they repay, so it is greener to not fit them.

  • rate this
    +6

    Comment number 509.

    " JamesStGeorge
    Just recently the EU put taxes on imported solar panels!"

    The EU had good reason to believe that China was dumping such panels on the world market at below cost so as to put competitors out of business and get a stranglehold on world supply. Even if you think removing competition that way to give China a monopoly is in our long term interest, most reasoanble people wouldn't.

  • rate this
    +3

    Comment number 508.

    Those guaranteed prices for solar and wind power generated energy don't pay for themselves you know.

    The poorest in society are subsidizing the middle classes solar panels and rich land-owner's windmills.

    It's a scandal.

  • rate this
    +3

    Comment number 507.

    490 xyriach - Good find, shows nicely how dubious that claim is. It's based on the idea that per year, more energy is spent producing solar panels than is gathered for them... but in a rapidly growing industry that isn't surprising.
    Solar panels also last far longer than just 1 year, so I'm really not sure what the point is, other than to try and discredit solar power.

  • rate this
    0

    Comment number 506.

    #492 Wind power can be made useful if you have a decent storage system to allow you to bank the power generated, and then only sell power which you already have. Not an ideal but it would be much better than the current ridiculous situation of having to keep plants on standby at 90%+ of their running costs to pick up the slack when the wind drops

 

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