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npower warns energy bills will increase by £200 by 2020

Energy bills could increase by £200 in just six years, according to npower

Energy bills could increase by £200 in just six years, according to npower

A report released by energy supplier power, states that the average dual fuel energy bill will increase from £1,123 in 2013 to £1,330 in 2020. It adds that should households take more initiatives to insulate their homes, this increase could be cut to £1,240.

Speaking on the report’s findings, npower Chief Executive Paul Massara, said: “The actual unit price of energy in the UK is one of the lowest in Europe but bills are high because British houses waste so much energy.

“If we can increase the efficiency of the UK’s old and draughty housing, we can ensure that annual energy bills are some of the lowest too.”

Increasing distribution costs

In the report entitled “Inside the Cost of Energy”, npower states that bills will continue to rise, in part due to increasing distribution costs.

The research suggests that network costs (the price of transporting gas and electricity) will increase by £19 between 2015 and 2020 – from £295 to £314.

Ofgem disagrees

Following the release of npower’s report, energy regulator Ofgem issued a statement questioning the figures used by the energy supplier.

“It is unclear how npower can state with any authority otherwise,” an Ofgem spokesperson said, in relation to the supplier’s claims that distribution costs would rise. The regulator expects distribution costs to remain stable in the near future.

‘There is no hidden profit’

Massara told BBC news that npower did not make the huge profit margin which many media outlets insinuated. He said that the company’s target profit margin was 5%, but added that in 2012 this figure was 3.5%.

“This report is about giving the facts,” Massara added. “A lot of myths have been bandied about recently.”

The report also looks to demonstrate that the big six energy firms are not solely to blame for price issues in the energy market. Inside the Cost of Energy states that more than 140 companies are actively involved in the energy sector, 80 of which trade energy on the markets.

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