Energy Bills to Soar to Cover Cost of Green Investment

Energy Secretary Chris Huhne has outlined measures to encourage energy companies and other firms to make substantial investments into both nuclear and renewable energy – and energy bills are set soar as a result.

We all want greener energy – but at what cost? The Government is planning a major shift away from fossil fuels to help cut carbon emissions to meet both UK and EU emissions targets. But the latest plans could add hundreds of pounds to household energy bills.

The Government’s scheme will see the construction of thousands of new wind turbines, tidal power stations and new nuclear plants to replace existing ones which are coming to the end of their useful life.

Ministers say the cost of the shift to greener energy will be £110 billion, resulting in an extra £160 per year added onto energy bills by 2030. However, this figure relies on the assumption that households will cut their energy use by 30% over the same period, something that many families will find difficult.

Ofgem, however, has a different set of figures. The industry regulator calculates that the plans will cost more than £200 billion by 2020. It also talked about a 52% rise in bills, equivalent to around £600 per year.

Other analysts have also weighed in. UniCredit bank analysts are predicting that the true cost to consumers will be even higher, with energy bills rising by approximately £1000 a year.

Mr Huhne defended the proposals, saying they are all that stand between the country and power cuts. He said, “You can have blackouts or you can have investment. Which do you want?” He added that energy bills would still rise significantly even if ministers didn’t act.

Moneyhighstreet comments: “With energy companies already putting up their prices, further rises in the future could force more homes into fuel poverty – when households spend more than 10% of their income to keep themselves adequately warm and supplied with gas and electricity.

“Hopefully, any rises will lead to increased competition between energy companies. And as more energy companies enter the market, a wider selection of tariffs may help consumers minimise their bills.”