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
    +2

    Comment number 605.

    It is quite clear, that privatisation of the energy sector has failed, high cost of fuel, need for taxpayer to invest billions to guaranty future supply and no accountability. What needs to be done now is nationalise the industry, heavily invest in future production to secure the next 30 years of energy, fund energy R&D for cleaner sustainable energy and to find the political will to do it.

  • rate this
    -2

    Comment number 604.

    Rosetta.
    Everyone that uses those things pays for them. So what?
    I sent my children to private school have private health care and create, yes create, through my business, last year, just over £300k in taxes. So yes I think i can say I pay my bit. How about you or are you still banging on about spending my money?

  • rate this
    +3

    Comment number 603.

    596. Come the Glorious Day

    Our press pretend it's us or North Korea. So we'll put up.
    Our US style money elitism is as ideological as Soviet Communism, as many East Europeans are finding.
    We need an economic system that serves people, not energy companies. Scandinavia, middle Europe isn't the ultimate ideal but it'd be a big step forward for UK.

  • rate this
    +1

    Comment number 602.

    There is ONE course of action that will hit the BIG 6 where it hurts.

    That is mass migration to the smaller companies.

  • rate this
    +4

    Comment number 601.

    572.Ppuj
    36 Minutes ago
    "Privatisation has given us better services in every sphere. Only an idiot would deny this."

    And I am indeed that idiot! My electricity still seems to be the same old lethal 240 volts of British juice as it was when it came from the CEGB, it just costs a shed-load more. The water I get from Yorkshire water isn't much wetter than it used to be neither.

  • rate this
    0

    Comment number 600.

    596.Come the Glorious Day
    &
    595.treacle_01

    593. Megan
    A government that understood its obligations and duty of care to the citizens who employ it would act on their behalf to curb greedy private companies.

    Where can I find such a government, please?

    ************************
    North Korea?
    +++

    Ladies & Gentlemen, I give you the new "Chuckle Brothers"!

  • rate this
    -1

    Comment number 599.

    Of course lo-C energy will be more expensive: we'll have to pay the full costs of our energy for a change. We've been paying the cost of getting the coal, gas and oil, but we've been deferring into the future the cost of the impacts of fossil fuel consumption and their mitigation (e.g. more flood defences, drainage, water storage, heating, cooling, higher insurance - and that's just for now).

  • rate this
    +1

    Comment number 598.

    593. Megan
    Nowhere's perfect but a good bit of continental Europe is a good bit better than UK at protecting the public. They regulate banks, industry eg. power, and advertising, but give teachers more space and individuals more privacy. Less income gap and more social mobility yet a better economy.
    I've lived in Germany; I know it's not perfect but we have a lot ot learn.

  • rate this
    -4

    Comment number 597.

    So, according to the article the average combined fuel bill is currently £1,287. By 2020 RWE forecasts that to rise by £200. That equates to an annual compound increase of 2.1% which is significantly below the current rate of inflation.

    Sounds reasonable to me.

  • rate this
    -1

    Comment number 596.

    593. Megan
    A government that understood its obligations and duty of care to the citizens who employ it would act on their behalf to curb greedy private companies.

    Where can I find such a government, please?

    ************************
    North Korea?

  • rate this
    -2

    Comment number 595.

    @593.Megan
    6 Minutes ago
    A government that understood its obligations and duty of care to the citizens who employ it would act on their behalf to curb greedy private companies.

    Where can I find such a government, please?

    ---

    North Korea?

  • rate this
    -2

    Comment number 594.

    If BT had not been privatized, it's exchanges would probabaly still have
    relays in them, and not gone digital, and you would not be able to have
    a rant on HYS.

  • rate this
    +1

    Comment number 593.

    A government that understood its obligations and duty of care to the citizens who employ it would act on their behalf to curb greedy private companies.

    Where can I find such a government, please?

  • rate this
    +3

    Comment number 592.

    It is a shame so many want to just take a narrow political point of view

    Blaming the “rich”, Eton toffs, Cameron and Thatcher

    The highest rated comments blame the greedy energy companies for their huge profits yet our energy prices are one of the lowest in Europe, go figure?

    How about state owned power companies and 75% increase in your bills?
    That make you happier?

  • rate this
    0

    Comment number 591.

    We need a not-for-profit uk company named British Energy. Consumers should pay a local wholesale price of energy plus a fixed margin for operational costs, while selling energy back at the wholesale price if they can. Competition has failed to deliver cost and operating efficiencies while resulting in a price fixing cartel that fills the pockets of shareholders and the treasury.

  • rate this
    0

    Comment number 590.

    589.Ppuj
    All you lot complaining are hilarious. All trying to spend other peoples money.
    -
    Did you pay for the -
    road outside of your house?
    lighting that line the paths and roads?
    sewerage infrastructure under your house?
    upkeep of the parks nearby?
    school your children attend?
    ambulance service in your town?
    police that keep you safe?
    phone line network that you've use to spout your BULL online?

  • rate this
    -2

    Comment number 589.

    All you lot complaining are hilarious. All trying to spend other peoples money. Always other people with more than you.
    Train services in this country are excellent compared to the nationalised days.
    No power cuts unlike many western countries.
    Clean drinking water.
    Excellent telephone service.
    You lot just don't know how lucky you are.
    Maybe you need to do some travelling to see.

  • rate this
    +5

    Comment number 588.

    581.Ppuj
    No, thank god she's gone.

    If it's sick to not be greedy, to try and see what's good for everyone and not just me, to seek to ensure everyone has a fair share and everyone has the opportunity to benefit from our resources then yes, I must be.
    You're not worth the effort - I've said before planes leave Heathrow for the US every day.
    Do us all a favour and use some cash for a ticket.

  • rate this
    +4

    Comment number 587.

    581.Ppuj
    You are already,its called the Green Tax,you are subsidising land owners to have wind farms on them.Its also called tax relief on debt, you are subsidising macquarie allowing them to load up Thames Water with debt so the tax payer has to underwrite the cost of the super sewer, or Tescos under paying staff resulting in HB and Tax credits for the low paid, or landlords with HB.

  • rate this
    +4

    Comment number 586.

    581.Ppuj
    So you are saying that I should be subsidising somebody else by the state owning electricity companies...
    I would prefer to buy shares in said utilities if I so choose and not subsidise others.
    -
    You do realise that anyone who uses the utility you 'invested' in will be subsidising your dividends and as such will become a bigger parasite than those you complain about.

    Priceless!

 

Page 6 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.