Annual Energy Bills ‘To Rocket By 2020’

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Annual household energy bills could rise by more than £600 within seven years so power companies can keep the lights on.

Sky News has learned the watchdog has written to the Treasury ahead of next week’s budget to warn of rising costs.

In a new forecast, consumer champion Which? has predicted energy companies will need to spend £118bn on new infrastructure between now and 2020.

This would include building new power stations, replacing grids and building wind farms as part of a drive to sustain Britain’s power supply and cut down on carbon emissions.

Which? believes this cost will inevitably be passed on to consumers, and that households and businesses will foot the bill.

This would mean that the average bill would exceed £2,000 a year even if wholesale costs of gas and electricity remain stable – an annual rise of £640 per household.

Average electricity bill breakdown

Richard Lloyd, executive director of Which?, said: “I don’t think consumers know that this is heading their way and that decision has already been made by the Government.

“This is a massive chunk potentially on everyone’s bills. This means one thing: that household bills are set to rise, and to rise for many people very steeply for the foreseeable future.”

Which? is campaigning for a full market investigation to find out if consumers are paying a fair price for energy.

Sky News also learned that at least one of the ‘big six’ energy firms is not guaranteeing to make the necessary investment should it not prove profitable for the company.

Energy companies rely on investors – who require a return on their investment – to finance certain projects.

Angela Knight, of Energy UK, the body representing the industry, said: “A lot of this is all about the policy that the Government and previous Government signed up to.

“Right now there is significant concern about the price of a bill and that is before much of this investment comes through.

“At the same time, a lot of our stuff is old and you do have to refresh and replenish.”

One move Chancellor George Osborne may deploy to tackle the costs being passed through to consumer energy bills could be freezing the Carbon Floor Price in next week’s budget.

The tax policy means polluting industries must pay a minimum amount of money for the right to pollute.

If Mr Osborne were freeze or abolish the Carbon Floor Price, the knock-on effect would prevent around £8 being added to bills each year, according to one energy company source.

In December 2013, HM Treasury released estimates of planned national infrastructure investments relating to 2013-2020 and beyond.



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