Energy News

Energy bills may rise to secure supplies

Tuesday, 9 March 2010

By Daniel Barnes- daniel@consumerchoices.co.uk

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Our gas and electricity bills could rise as energy firms need to invest £50billion in new power stations and wind farms.

Energy firms could start to hike energy bills, as they need as much as £50billion to invest in new power stations and green measures over the next three years.

£50 billion of investment is needed

New nuclear, gas and coal power stations, wind farms and initiatives to cut carbon emissions are needed, to ensure the UK continues to enjoy a secure supply of energy, according to a report by consultants Ernst & Young.

The report finds between £35 billion and £50 billion of investment is needed and calls for urgent decisions to be made as around one-third of the UK’s electricity generation capacity is expected to close in the coming decade.

The report, commissioned by Scottish & Southern Energy, claims investment could be muted if energy firms come under pressure to cut bills as their profits rise.

The report claims energy firm’s returns remain low, but energy price increases could push up profits. The general election is also seen as a potential source of delay for investment.

The study comes as energy firms have come under some of the most severe pressure in recent years for not cutting household bills in line with the massive fall in wholesale prices.

In the last week, Scottish & Southern Energy and E.ON both cut their gas prices. And British Gas cut its gas prices last month.

Chris Eagle, commercial manager at Energychoices.co.uk, said: “Energy prices are dropping at the moment, but there are fears the long-term trend will be upwards as energy firms look to pay for massive investment.

“To cut your bills the best tactic is to compare the energy deals on offer and opt for an online dual fuel deal and pay by direct debit.”