Consumers need to cut usage by £400 to hit Decc’s targeted 2020 energy bills

Consumers will need to cut their usage to lower their bills by £400, if the government’s 2020 energy bill target is to be met, an analysis by PwC has found.

The Department of Energy and Climate Change (Decc) will have to “rely heavily” on consumers reducing their usage, to ensure the forecasted 2020 annual energy bill of £1,331 is met, accoding to PwC’s Energy 2020 Tracker.

PwC stated that a “greater focus will be required from all sides” on the implementation of energy efficiency savings, as well as policy reforms, greater consumer awareness and incentives if the savings outlined by Decc are to be realised.

The study found that progress is being made towards government environmental targets, such low carbon generation, although it added that policy success in these areas would put upward pressure on unit energy costs for households.

The report highlighted a “mismatch between concern about household energy bills and a lack of consumer awareness of their role in reducing energy costs”.

Steve Jennings, head of power and utilities, PwC, said: “On the current trajectory far more needs to be done on energy efficiency.

“Wholesale prices may deliver some reduction for energy bills, but energy consumption savings need to deliver far more.”

Policy costs are expected to double between 2013 and 2020, “accounting for around £230 (in 2012 terms) of the average household’s bill by the end of the period”.

Network costs are also expected to increase by up to 20 per cent by 2020 due to additional investment in the UK’s power and gas networks. Supplier costs and margins on the other hand, will remain a “relatively small element of the total bill”.

Jennings added there is a “difficult balancing act” in achieving low carbon, secure and affordable energy and “far more complex than wholesale costs, and supplier margins alone”.