Npower issues second correction of energy cost figures

Npower has slashed its estimate of the cost of Electricity Market Reform to businesses, in its second climb-down this week.

In a correction issued on Thursday, Npower said EMR would increase wholesale power prices by between £10 and £25/MWh by 2020, not £30/MWh as claimed on Monday. It had included the figure in a report setting out big business concerns over energy policy.

It followed a last-minute tweak to Npower’s projections for household bills, after Ofgem pointed out errors in its calculations on the impact of network charges.

Just before Npower published its second Energy Explained report on Wednesday, Ofgem accused the supplier of using “inaccurate and misleading” data. Npower subsequently admitted its figure for the impact of gas network charges on a typical household bill in 2020 was out by around £15.

The Department of Energy and Climate Change also published a rebuttal to Energy Explained, accusing Npower of “misleading on so many levels”. While it did not go into detail on the supposed inaccuracies, the statement said Npower had included policies that are not actually funded through bills.

Carbon Brief blog pointed out Npower had included the costs of energy efficiency policies but assumed they will not lead to any cut in household consumption or bills. “Arguably, government has been over-optimistic about how effective energy efficiency can be to limit bill rises,” it said. “But including the costs and assuming the policies have zero effect, as Npower have done in their analysis, seems questionable.”

Npower’s analysis suggests the typical annual household bill will rise to £1,330 in 2020, driven by policy and regulatory costs rather than supplier profits.

Paul Massara, chief executive of Npower, said: “At times during the current energy debate the facts have been in short supply, particularly amid rumours of profiteering and broken markets…

“Supply companies like Npower have control over less than 20 per cent of energy bills, yet they are exposed to 100 per cent of the cost and blamed for 100 per cent of any price rise.”