Ofgem refutes npower bill figures

ofgemOfgem has challenged figures used in a report looking at the potential increase on energy bills from the cost of upgrading the nation’s infrastructure.

In the ‘Energy Explained: Inside the Cost of Energy’ npower sets out how household energy bills have changed since 2007 and gave an outlook of how they will change out to 2020.

It predicts policy and regulation costs are expected to rise by 272% between 2007 and 2020, transportation costs will increase by 74% to fund new investment in infrastructure and supplier costs to remain flat.

It says without taking action to save energy, annual household energy bills could rise to £1330 by 2020.

But the regulator described the data used on network costs in the report as “incorrect and misleading”.

“We offered to help npower improve the accuracy of their numbers for network charges and it is disappointing that they did not engage fully with us until after the document had been circulated. Ofgem directly regulates the money that network companies can earn through charges. Given this level of certainty we can see that after 2014 network costs per household are expected to remain broadly flat in real terms. It is unclear how npower can state with any authority otherwise.”

In a later correction to its figures, Npower did cut its projections for increased energy transportation costs is to around £5 to £10 per dual fuel customer over the period 2014 to 2020, about £15 lower than earlier calculated.

Paul Massara, RWE npower CEO, said the aim of the report was to “shine a light” on energy bills.

“Suppliers control less than 20% of a bill and I want to shine a light on all the different aspects of energy – particularly to reassure my customers that there is no hidden profit: we made a 3.2% margin in our retail business in the first nine months of 2013. Over the same period our power stations were struggling to recoup the hundreds of millions of pounds in investment required to build them, and made a loss of £59million.

“In 2013 we traded energy with around 80 other companies through open market exchanges. The actual unit price of energy in the UK is one of the lowest in Europe – but bills are high because British houses waste so much energy. If we can increase the efficiency of the UK’s old and draughty housing, we can ensure that annual energy bills are some of the lowest too.”

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