Energy Bills 'To Increase By £240 By 2020'

British consumers are forecast to pay £240 more for their annual energy bills within seven years, according to a utility firm report.

RWE npower predicted the average yearly bill - for all energy customers, not just its own - will rise from £1,247 to £1,487 by 2020.

The company believes official forecasts for future energy savings have been too optimistic when it comes to green technology.

It said support for low-carbon technologies would add £82 to the average energy bill by the end of the decade, up from £34 this year, and £12 in 2007.

Support for low-carbon power sources accounts for less than 3% of the average household bill, which will rise to 5.5% in 2020, the company predicted.

Meanwhile, energy company profits have risen from £18 on the average dual fuel bill in 2007 to £59 this year.

In 2020, npower predicted profits would rise to £71, staying constant at around 5% of the bill.

The cost of measures to help people save energy and money through greater efficiency, such as insulation, has increased from £17 in 2007 to £69 now and £88 at the end of the decade.

Onshore and offshore wind farms have been a key low-carbon strategy

Npower said the total cost of Government policy and regulation, which includes general tax on energy and support for vulnerable households, will rise from £185 today to £329 by 2020 on the average bill.

It said total operating costs will rise from £208 now to £241 in the same period.

The wholesale cost of gas and electricity currently makes up 45% of the bill, or £565, but npower said Government data showed gas and electricity will become £50 cheaper by the end of the decade.

The firm's chief executive, Paul Massara, said: "Government policy is rightly delivering the transformation we need to address the UK's poor housing stock and encourage investment required in new infrastructure.

"But achieving these aspirations comes at a cost, and this is what needs to be clearly communicated to consumers."

Greg Barker, minister for energy and climate change, rejected parts of the npower report and said: "Global gas prices, not green policies, have been primarily pushing up energy bills.

EU directives restrict the life span of conventional coal power stations

"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 said Government policies were keeping bills lower than doing nothing, with a typical household saving £65 today and £166 by 2020, compared with if the UK remained reliant on fossil fuels, failed to tackle climate change and did not make homes more efficient.

A separate report also found that while Britons are prepared to pay for a shift to renewables, they do not trust the Government or power companies to deliver a clean, secure and affordable energy system.

Researcher Dr Catherine Butler said: "If Government or energy companies are saying your bills are going up because of renewables, that isn't necessarily going to be taken on trust."

She added: "There's a real sense of anger about the profit-making nature of energy companies when it's seen as a basic need, not a consumer good."

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