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Average energy bills to rise to £1,487 by 2020

A new report by RWE npower, Energy Explained, has claimed that the average household energy bill could rise to £1,487 by 2020 – a £240 rise, not taking into account inflationary increases.

The rise is said to be primarily driven by the impact of unprecedented investment in new infrastructure, and the cost of improving energy efficiency in people’s homes.

Energy Explained summarises how the make-up of domestic energy bills has changed since 2007, and gives an outlook of how they will change from 2013 to 2015 and out to 2020, showing that:

  • Policy and regulation costs are expected to rise by 78 per cent between 2013 and 2020;
  • Transportation costs will add an additional £114 on the average domestic bill by 2020;
  • Supplier costs will remain flat – although the cost of rolling out smart meters will add £24 on the average household bill by the end of the decade;
  • Commodity costs currently make up 45 per cent of the bill – but by 2020 this will only be 35 per cent, as other costs become make up bigger portions of the bill.

RWE npower CEO Paul Massara has today called on government and industry to come together to give consumers a clear message about rising energy costs, to help rebuild trust and give consumers the information required to take action.

Mr 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.

“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.”

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