A report issued by npower claims that, without taking into account inflation, the average bill will surge from £1,247 to £1,487 by 2020. Government green policies are singled out as the principal reason for the price hike.
The energy supplier claims that projects such as the development of wind farms and energy efficiency will add an average of £144 to consumer bills.
Energy suppliers used as scapegoats
Paul Massara, chief executive at npower expressed his dissatisfaction at recent survey findings which revealed that consumers believe energy firms make a 40% profit margin and are at fault for price increases.
Massara said that in reality “our profits are more like 5% and the main factor behind rising costs is government policy and regulation”. He called to an end to the “blame game” being played between suppliers and the government and says it has led to “confusion, mistrust and misinformation”.
He added that he was in favour of green initiatives, however, wanted consumers to be aware of their costs and that bills would rise if energy consumption was not lowered.
The report also highlighted upgrading the UK’s gas and electricity networks as a reason for price rises and estimated that the process will add £114 to bills by 2020. The installation of smart meters across the country will add a further £24. Profits will account for £71 or 5% of the bill which represents an increase of £12.
The report claims commodity costs have caused a £51 rise since 2007. In the same period, government subsidies have increased bills by £110.
Speaking on the report Greg Barker, minister for energy, said: “Global gas prices, not green policies, have been primarily pushing up energy bills. That is why it is vital we crack on with securing investment in a diverse energy mix that includes renewables and new nuclear, as well as gas.
“We must also continue to drive up the energy efficiency of the nation’s housing stock, particularly the homes of the most vulnerable households.”
He added that government initiatives were impacting bills positively and that households were today saving £65 on average due to a lower reliance on fossil fuels. He claimed that this saving would rise to £166 by 2020.
‘Price ping-pong’ adds confusion to market
Speaking on the latest chapter in the supplier vs. government price rise argument, Gillian Guy, chief executive at Citizens Advice said: “Consumers bear witness to a ‘price ping-pong’ between suppliers and the government as they argue just who is responsible for hiking up costs. This makes it difficult for customers to get to the root of price rises and understand exactly how or indeed whether they can control their bills.
“With the sun shining, paying to keep your house warm won’t be at the forefront of people’s minds at the moment. When the temperatures start to drop the high cost of energy will once again be a big worry for households. The debate about responsibility for costs, started afresh by npower today, needs to be concluded so there is transparency about the cost of energy bills.”