Electricity network overhaul will cost each household £4.30 per year

Ofgem, the energy regulator, has approved investment in the regional electricity network, which will cost each household an extra £4.30 per year, on avergage.

This may sound like a relatively small price to pay for the proposed improvements to the network, but uSwitch.com is now warning that this publicised figure is only a small part of a much broader £233.5 billion energy investment programme that is expected to add £548 a year in total onto consumer energy bills.

The key costs making up the £233.5 billion investment are:

Renewable energy generation – £112.5 billion
Power plants (including gas-fired, coal-fired and nuclear) – £52.1 billion
Upgrading pipes, networks and gas storage – £39.8 billion
Roll-out of smart metering – £13.4 billion
Carbon emissions reduction target – £15.7 billion

Ofgem calculated that household energy bills could hit £2,000 a year as a result of investment, but the uSwitch report claims that we could see household energy bills hit as high as £4,733 a year by 2020, nearly four times higher than they are today.

Ann Robinson, Director of Consumer Policy at uSwitch.com, said:

“£4.30 a year may seem small fry, but in fact it’s a wake-up call for us all. This is just the beginning of a huge investment process that will lead to significantly higher household energy bills. The £5,000 a year energy bill may seem like an outside possibility, but we have to remember that energy bills doubled in the last five years alone and that the huge investment needed just to keep the lights on in Britain will alone add £548 a year onto our bills. The fact is we are entering a new era of high cost energy and households will have to adapt their behaviour accordingly.”

“The Government has been banging the drum for energy efficiency for a while now, but consumers have been reluctant to spend money on these measures. As a result, energy efficiency has been massively underperforming even though it is one of the biggest defences we have against escalating energy costs. We also have a competitive energy market, and yet less than 5% of consumers are on the most competitive energy plans – most people are paying far more than they have to for the energy they use.”

“This has to change. My advice to consumers is to invest in making your home more energy efficient, reduce the amount of energy you use and make sure you are paying the lowest possible price for it. Big projects such as a new energy efficient boiler or home insulation can be expensive, but the savings you make through cutting the price of your energy could be re-invested into energy efficiency measures so that you reap even greater rewards in the future.”

“Don’t be put off. If cost is an issue, speak to your supplier to see if they can help – they have a pot of money available to help households with energy efficiency. Or contact the Energy Saving Trust for advice. The key thing is to start future-proofing yourself against higher energy bills now.”