RWE npower has released a new report which claims that policy and regulation costs will represent the largest proportion of energy bill rises in the lead up to 2020.
The report, Energy Explained, claims that policy and regulation costs imposed by the government are expected to rise by 78% between 2013 and 2020. In comparison, npower claims that its supplier costs will remain flat and that commodity costs, which currently make up 45% of the bill, will fall to 35% as other costs will make up bigger portions of the bill.
RWE npower CEO Paul Massara accused the government of blaming energy companies for the rise in energy bills and causing confusion amongst the public. He explained: “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. This blame game hasn’t helped people – if anything, they don’t know who or what to believe. It’s led to confusion, mistrust, and misinformation, and that’s something we urgently need to address.
“A recent npower survey showed that people believe supplier profits are typically about 40%, and general perception is that bills are rising because of supplier-controlled costs. In fact, our profits are more like 5% and the main factor behind rising costs is government policy and regulation to fund this country’s transition to a more efficient economy, with modern infrastructure and warm, insulated homes for all.”
Massara believes that government and industry need to unite to deliver a consistent message to the public, as energy costs remain an extremely contentious issue. He added: “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. The fact is that if people don’t take action to reduce energy consumption, their bills are going to rise. If we can’t be upfront about that, we won’t be able to convince people to make big changes to be more energy efficient.
“This isn’t about shifting responsibility – energy suppliers need to play a big part in communicating this message and supporting customers. We’ve got to remove confusion and complexity out of energy, which is why we’re developing simpler bills and tariffs, and offering energy efficiency support and advice to all of our customers. But the public need to hear a clear and consistent message across the board if we’ve got any chance at all of helping them to tackle rising costs.”
Greg Barker the minister for energy and climate change welcomed the debate but noted that “global gas prices not green policies have been primarily pushing up energy bills.”
He added: “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.
“Today our polices are keeping bills lower than if we did nothing – by an average of £65 for typical households. 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.”