Energy bills 'could rise by £300'
Household electricity bills could be pushed up by around £300 a year by 2020 as a result of a continued reliance on fossil fuels to provide energy, environmentalists have warned.
Friends of the Earth hit back at claims that "green taxes" were causing energy bills to rise with a report which suggests that investment in fossil fuel plants rather than renewables would leave British households footing the bill for the increasing costs of coal and gas to make electricity.
The report said that if the Big Six energy companies were to abandon building new renewable energy sources such as wind power and forged ahead with new fossil fuel plants in order to bridge the looming energy gap, householders would see rises in bills.
According to the report, electricity bills rose by 30% in real terms between 2000 and 2010, while gas bills jumped 78%. The rises were largely due to increased costs of coal, which rose by 71%, and natural gas, which rose 90%, in the decade, Friends of the Earth said.
In 2010, green policies added £42 on to bills, while in latest rises this year the Big Six pushed up the average energy bill by as much as £170, according to the report, blaming increases in wholesale prices.
If gas and coal costs rise in the coming decade by the same amount as they did between 2000 and 2010, the nation would face an additional bill of £8 billion a year by 2020 to generate electricity, costing the average householder an extra £300 compared with what would happen if the UK met its targets to boost renewables, Friends of the Earth claimed. Rising gas prices would also push up the cost of heating homes, the green group warned.
If they rise according to central predictions by the Department of Energy and Climate Change (Decc), bills would go up by £150, but they could soar by more than £500 if fossil fuel prices spiralled, the green group said. Analysis from Decc suggests that green policies to support renewables and decarbonise the power sector could push up electricity prices by around a third by 2020, but officials claim that these rises will be offset by other policies such as energy efficiency and that environmental action would only increase the average energy bill by £13 by the end of the decade.
Friends of the Earth's executive director Andy Atkins said: "The Big Six are tipping the UK's energy system in favour of expensive gas while neglecting investment in clean energy and slashing energy waste which would give consumers a better deal in the long run. David Cameron must urgently set up a public inquiry into the power of the Big Six energy companies - ending their stranglehold over the UK's energy system will be good for consumers, good for business and good for the planet."
A Decc spokeswoman said: "We know rising energy prices are hitting households hard. That's why we are taking action now to make sure Britain will not be so vulnerable to the rising global cost of imported fossil fuels in years to come by moving to a cleaner, greener homegrown energy mix here in the UK."
British Gas has pledged not to raise prices this winter after raising gas and electricity prices by an average of 18% and 16% respectively in August. Phil Bentley, managing director of British Gas, said: "We want our customers to be confident they are on the right deal for them. That's why we're ensuring everyone benefits from the discounts and rewards available."