'Big Six' firm npower says government green policies will raise bills

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A major 'Big Six' energy firm has been the first of the group of major suppliers to say new green policies will result in higher energy bills.

RWE npower has warned the shift in government policies would result in energy bills sky-rocketing by more than 19% by 2020.

In a report published today (July 16), the energy firm predicted the average energy bill would rise by £240 to £1,487 by the end of the decade.

npower chief executive, Paul Massara, said a "blame game" between suppliers and the government had led to "confusion, mistrust and misinformation".

He also said customers were wrong to believe energy firms made huge profit margins of 40% and were responsible for the rising bills.

He added: "In fact, our profits are more like five per cent and the main factor behind rising costs is government policy and regulation."

The report pinpointed government's policies, such as subsidies on new wind farms and new energy efficiency policies, as the main reason behind the an eventual rise in energy bills of £144.

While the Green Deal, which allows customers to seek loans or potential cashback options on things such as new boilers, has seen little take up on offers for customers to improve their home's energy efficiency, it is other policies such as the Energy Company Obligation (ECO), which have come under criticism from energy firms.

The Government claims ECO will add £53 to the average duel fuel bill, but npower predicts the figure is closer to £88.

Upgrading  the country's ageing gas and electricity was also identified as a reason for the increase in future costs, adding £114 to the average bill by 2020.

Mr Massara, added: "Government policy is rightly delivering the transformation we need to address the UK's poor housing stock and encourage investment required in new infrastructure.

"But achieving these aspirations comes at a cost, and this is what needs to be clearly communicated to consumers."

However, Greg Barker, minister for energy and climate change, has been quick to reject some parts of the energy supplier's report.

He said: "Global 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.

"We must also continue to drive up the energy efficiency of the nation's housing stock, particularly the homes of the most vulnerable households."

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