July 15, 2013 / 11:19 PM / 5 years ago

Rising energy bills driven by policy, transport costs - RWE

LONDON (Reuters) - Britons will pay an average 20 percent more on their annual energy bills by 2020 due to the rise in costs related to policies and transportation rather than wholesale prices or companies seeking profit, energy supplier RWE npower said.

In Britain, energy suppliers are often accused by the public of unnecessarily increasing households bills to fill their own pockets.

The average household will pay around 1,487 pounds per year on their energy bills by the end of this decade, a rise of 240 pounds, but global commodity prices or profit-hungry utilities are not to blame, a report published by the UK arm of the German utility said on Tuesday.

It said households’ bills will rise mainly due to the cost of government programmes to encourage greener forms of energy production and energy efficiency and to ensure sufficient capacity is available.

The amount of money suppliers have to spend on transporting electricity and gas in Britain will also increase.

RWE npower chief executive Paul Massara defended the need to raise investment in new infrastructure, but said the government needed to better communicate the fact that consumers’ bills will be affected by higher costs.

“This isn’t about shifting responsibility - energy suppliers (also) need to play a big part in communicating this message and supporting customers,” he said.

RWE npower says it makes around 5 percent profit in its retail business and that its findings showed future tariff increases will be down to factors out of its hands.

The share of energy costs due to governmental policies will rise to 22 percent by 2020 from 7 percent seen in 2007, the report showed.

The price of gas and electricity on the wholesale market currently accounts for around half the price of a bill, a share that will drop to around 35 percent by the end of the decade as policy costs rise.

The government defended its policies on Tuesday, saying the global price of gas was still the main factor determining bills that needed to be addressed.

“Gas prices not green policies have been primarily pushing up energy bills. 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,” said Greg Barker, Britain’s minister for energy and climate change.

By shifting greater parts of the energy mix to renewables, the government claims household energy bills will be around 170 pounds lower in 2020 than if nothing would change.

The government has been trying to alleviate public concern about high energy bills and the perception that suppliers overcharge customers.

Regulator Ofgem earlier this month proposed reforms to limit suppliers to offering four core tariffs and to help customers find the cheapest option, changes that are likely to come into effect in December.

Reporting by Karolin Schaps, editing by Jeff Coelho

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