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npower delivers clarity on the changing cost of energy

16/07/2013

RWE npower CEO Paul Massara has today called on government and industry to come together to give consumers a clear message about rising energy costs, to help rebuild trust and give consumers the information required to take action.

A report launched today by npower sets out how energy bills are expected to rise between now and 2020, to explain precisely what is driving energy costs up, where a customer’s money goes, and why action needs to be taken to save money and reduce consumption.

Paul Massara, npower CEO, explained: "For a long time, blame has shifted back and forth from energy suppliers to government, each pointing the finger at the other for rising costs. This blame game hasn’t helped people - if anything, they don’t know who or what to believe. It’s led to confusion, mistrust, and misinformation, and that’s something we urgently need to address."

"A recent npower survey showed that people believe supplier profits are typically about 40%, and general perception is that bills are rising because of supplier-controlled costs. In fact, our profits are more like 5% and the main factor behind rising costs is government policy and regulation to fund this country’s transition to a more efficient economy, with modern infrastructure and warm, insulated homes for all."

"Government and energy suppliers need to be much clearer about the facts behind rising energy costs, so we can present one clear message to consumers: energy costs will rise, and the only way to control of this is taking action to reduce consumption."

The report, ’Energy Explained’, sets out a detailed analysis showing how an average household energy bill could rise to £1487 by 2020 (a £240 rise, not taking into account inflationary increases) – a rise which is primarily driven by the impact of unprecedented investment in new infrastructure, and the cost of improving energy efficiency in people’s homes.

Paul Massara said "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. The fact is that if people don’t take action to reduce energy consumption, their bills are going to rise. If we can’t be upfront about that, we won’t be able to convince people to make big changes to be more energy efficient."

"This isn’t about shifting responsibility – energy suppliers need to play a big part in communicating this message and supporting customers. We’ve got to remove confusion and complexity out of energy, which is why we’re developing simpler bills and tariffs, and offering energy efficiency support and advice to all of our customers. But the public need to hear a clear and consistent message across the board if we’ve got any chance at all of helping them to tackle rising costs."

‘Energy Explained’ summarises how the make-up of domestic energy bills has changed since 2007, and gives an outlook of how they will change from 2013 to 2015 and out to 2020, showing that:

  • Policy and regulation costs are expected to rise by 78% between 2013 and 2020
  • Transportation costs will add an additional £114 on the average domestic bill by 2020
  • Supplier costs will remain flat – although the cost of rolling out smart meters will add £24 on the average household bill by the end of the decade
  • Commodity costs currently make up 45% of the bill – but by 2020 this will only be 35%, as other costs become make up bigger portions of the bill

Rising energy costs can be tackled by reducing energy consumption – but to encourage people to take action will require a clear and consistent message from all parties.

To download a full copy of the report click here or visit http://www.npower.com/energy-explained/ for further information.

(ENDS)

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RWE npower is a leading UK energy company and is part of the RWE Group, one of Europe’s leading electricity and gas companies. We serve around 5.8 million residential and business customers with electricity, gas and energy. Through RWE Generation, we operate and manage a flexible portfolio of coal, oil, biomass and gas-fired power stations, producing more than 10% of the electricity used in Great Britain. We are also on twitter - @npowerhq and Youtube.