Energy bills could hit £2,000 a year by 2016

10 October 2009 / by Andy Davies

Annual household energy bills could rise to almost £2,000 in the next seven years, according to a new report from Ofgem.

Ofgem's report indicates that the worst case scenario could see households paying an average annual bill of £1,982 a year for their energy supplies by 2016.

However, according to uSwitch.com, this prediction may be 'understating' the amount that energy bills could rise, as the report only takes into account the £233.5billion investment Ernst & Young say is needed to secure the future of the UK's energy supplies, and is ignoring wholesale and pricing trends.

Research carried out by uSwitch.com earlier this year, accounting for ongoing pricing trends coupled with investment in infrastructure and the cost of cutting carbon and boosting energy efficiency, predicts this figure is likely to be more than £4,700 by 2020.

uSwitch's findings also show that since 2004 the average annual household energy bill has more than doubled from £580 to £1,239 in 2009.  

Commenting on the report, Ann Robinson, director of consumer policy at uSwitch.com, said: "It's great that Ofgem have released this information, but I feel that consumers are only getting half the picture. If bills rise by the amount that Ofgem suggests we will all have got off lightly. If Ofgem continues to ignore the impact of wholesale and pricing trends in these scenarios then it will be doing consumers a disservice.

Ms Robinson considers this report a 'wake up call' for people, saying the prospect of a £5,000 energy bill may seem like an 'outside possibility' but the investment needed to continue supplying Britain with energy will add an extra £548 onto household bills.

"The fact is we are entering a new era of high cost energy and households will have to adapt their behaviour accordingly," she said. "Consumers must now heed the underlying message that energy bills are inevitably going to rise in the medium to longer-term."

Suggesting ways in which people can help reduce the cost of their bills, Ms Robinson added: "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."  

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