Npower says government energy price hike predictions are too optimistic

Energy firm Npower has said that predictions made by the government that prices will rise by £166 a year without intervention are underestimated.

The initial statement by the Department for Energy and Climate Change (DECC) in March predicted that with government policies, which include energy efficiency policies and discounts, domestic customers could save up to 11% on their energy bills. This equates to a £166 saving on what bills would have been without government intervention.

Government-backed schemes to improve energy efficiency have include wall cavity and loft insulation, which DECC claims can save households anything between £25 and £275 a year.

But Npower warned on Tuesday that unless customers reduce their consumption, prices could rise to £1,487. This represents a rise of around £240, almost £100 more than initial government predictions.

Npower said that this rise is owed mainly to unprecedented investment in infrastructure and the cost of improving energy efficiency. The company’s CEO Paul Massara said that the government and energy firms needed to stop shifting the blame for rising energy bills and come together to tackle the problem head on.

“For a long time, blame has shifted back and forth from energy suppliers to government, each pointing the finger at the other for rising costs”, he said.

“Government and energy suppliers need to be much clearer about the facts behind rising energy costs, so we can present one clear message to consumers: energy costs will rise, and the only way to control of this is taking action to reduce consumption.”

Commenting on the report, energy minister Greg Barker said, “RWE Npower’s report makes an important contribution to the debate and it is right that we have a grown-up discussion about the impact of energy investment.”

Barker reaffirmed the government’s commitment to tackling the ongoing issue, saying, “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.”

Recent research carried out by Cardiff University on behalf of the UK Energy Research Centre found that despite price rises, the general public are committed to investing in a green, clean and sustainable future for the energy industry.

Speaking about the findings, Prof Nick Pidgeon said, “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 added that in most cases, respondents were “enthusiastic” about accepting changes to address energy system changes and “wanted the government and stakeholders to create an energy system that is fair, affordable, clean and sustainable.”

Further reading:

Majority of public want fair affordable and sustainability energy says study

Climate and energy policies will reduce rising energy bills

Clean energy can save UK £45bn and slash emissions, says climate watchdog

Renewables: the UK’s new industrial revolution

The Guide to Limitless Clean Energy 2013