UK Markets close in 2 hrs 51 mins

Analysts warn government policies could add almost £200 to energy bills

Fuel bills could rise by almost £200 a year thanks to wholesale prices and green policies (Getty Images)

Electricity bills could soar by £200 a year because of green policies and climbing wholesale prices.

Analysts Aurora Energy Research said such government measures as a drive to cut emissions, installing smart meters, the impending energy price cap as well as rising wholesale gas prices was piling pressure on energy companies.

It said the underlying costs facing the industry are likely to increase by £188 between now and 2025.

MORE: Experts fear ‘floodgates open’ on new wave of energy price rises

Richard Howard, head of research at Aurora, told The Times newspaper: “The recent price increases by energy suppliers are indicative of what we will see in the coming years. Our analysis suggests the average household electricity bill will increase by nearly £200 — from £619 in 2017 to £807 in 2025.

“The bulk of this increase is due to rising government policy costs and an increase in wholesale power prices — largely as a result of rising gas prices.”

Last week, British Gas and rival EDF Energy increased prices for a combined customer base of 5.4 million households within days of each other.

MORE: British Gas increases dual fuel bills by 5.5% hitting 4 million customers

British Gas said the 5.5% rise for dual fuel customers would add about £60 a year to bills, while EDF upped prices for just electricity, adding about £16 a year to bills.

Both pointed to rising wholesale prices but also policy changes.

British Gas increased prices for more than 4 million customers last week (Reuters/Darren Staples)

Experts said the real concern was that other members of the Big 6 energy providers would likely follow suit.

MORE: How will Theresa May’s energy price cap plan help 11m British households?

Theresa May’s government is preparing legislation to impose a cap on standard variable tariffs which will help some 11 million households.

These SVTs are the rates billpayers default on to once their longer-term, fixed tariff deals expire. They are more often than not more expensive that hunting around for a fixed rate.

However, Aurora said the price cap could actually see prices rise in the long term.