The UK government’s plan to build new power plants and cut pollution will be the main contributing factor behind an increase of almost 20% in power bills by the end of the decade, according to the utility RWE npower.
The group forecast in a report that policies to encourage a low-carbon economy such as a tax on emissions and subsidies for renewable energy will see the average annual household electricity bill rise to £1,487 ($2,244) in 2020 from the current figure of £1,247.
The firm’s chief executive officer (CEO), 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.”
Massara added that government and energy companies should be clearer about reasons behind power bill rises to help consumers reduce use, because suppliers control only about 16% of a bill.
The costs of policies such as requiring energy companies to improve home efficiency are expected to increase by 78% by 2020, while upgrading networks to accommodate new low-carbon projects such as wind farms will add a further £114 to bills by that year, a 124% increase from 2007, RWE said.
The portion of bills spent on gas and electricity will decline to 35% from 45% now as policy and network infrastructure take up bigger shares, the group forecast.
Greg Barker, the government 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.”
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