Leaked letter says bills could increase 30%

mattEnergy Efficiency, Utilities Market Regulation, Wholesale Utilities Markets

A letter from the Prime Minister’s Senior Policy Adviser suggests current energy policy could add 30% onto household energy bills.

Signing Contract

In a letter leaked to the Telegraph, from Prime Minister’s advisers Ben Moxham and Gila Sacks, there are claims 30% increases in household bills could be seen by 2020.

Senior Policy Adviser Ben Moxham said claims by the Department of Energy and Climate Change (DECC) that a 30% rise in electricity bills by 2020 would be offset by lower consumption were “unconvincing”.

Moxham said: “DECC’s mid-case gas price scenario sees policies adding 30% to consumer energy bills by 2020 compared to a world without policies.”

The letter suggests the DECC, headed by Energy Secretary Chris Huhne, has over predicted the amount of energy saving measures that will be taken by industry and households of their own volition.

Moxham said: “Their analysis may be based on the assumption that many energy efficiency measures will be taken up without subsidy, whereas we believe a large number of measures will need to be subsidised, given the hassle factor and other barriers to consumer uptake.”

The letter, dated July 29 2011, suggests that the impact of energy and climate policies on household bills in 2020 will be decided by the price of wholesale gas.

If wholesale gas prices are high in 2020, the return of investment in nuclear and renewables “could conceivably” be better for consumers, however if gas prices are low, the chance of a return on green policy is much slimmer.