HARD-PRESSED consumers across the country are to suffer another two decades of above-inflation energy bill hikes in order to pay for renewing Britain's ageing infrastructure, a Whitehall spending watchdog has warned.
Predictions of a continuing squeeze on household electricity and gas bills follows the recent announcement of price rises of almost 10% by some of the so-called big six providers, including SSE and ScottishPower.
The National Audit Office (NAO) said in a report published today that it expects the "significant" hikes to continue until 2030 because more than two-thirds of the £310 billion cost of upgrades to infrastructure is to be borne by consumers through their domestic bills.
Among the worst affected by the hikes will be households in the bottom 10% of earners, it warned.
Consumers are bearing most of the costs despite the upgrades and replacement of facilities, sites, systems and networks which deliver energy, transport, water and telecoms to millions of homes and businesses being privately financed, owned and operated.
The NAO warned: "High levels of expected new investment in infrastructure mean that energy and water bills may rise significantly from current levels. This is likely to hit those households with incomes in the lowest 10% particularly hard.
"The available projections suggest that increases in both energy and water bills will continue to outstrip inflation, on average, up to 2030. This is particularly concerning, given that energy and water bills have increased significantly in recent years, while incomes have not."
Earlier this year, Scottish Water announced its first rise in charges for four years but this was a below-inflation rise of 2.8%, resulting in households in Scotland facing average yearly bills of around £330.
Although the NAO report said it recognised the need for significant investment in new infrastructure, it pointed out that neither the UK Government nor the industry regulators knew by how much household bills would need to rise to cover the cost of investment or "whether bills will be affordable". The Department for Energy and Climate Change has estimated energy bills could go up by 18% in real terms over the period in question.
The report explained: "Affordability can only be assessed taking into account all household bills, household incomes and wider costs of living.
"Gaps in analysis and the lack of a common approach to measuring affordability mean the Government does not have an overall picture of affordability, either for the average household or for those on low incomes."
The NAO expressed particular concern about the plight of poorer households where energy and water bills accounted for 15% of spending in 2011, almost double the overall average of 8%. It comes as their incomes have fallen by 11% in real terms since 2002.
Labour MP Margaret Hodge, who chairs the Commons Public Accounts Committee, said: "I have serious concerns Government is taking decisions on infrastructure, banking on hard-pressed consumers to foot the bill, without knowing whether households will be able to afford to pay."
She called on ministers to work with regulators and private companies to ensure they had "robust information on the long-term impact of planned infrastructure on consumers".
Ms Hodge said: "They need to work together to ensure that consumers do not find their bills become increasingly unmanageable, particularly those on the lowest incomes who are hardest hit by price rises."
Ed Davey, the Energy Secretary, added that consumers felt "anger and frustration" at the energy companies, which had failed to justify hikes in household bills.
Meanwhile, another of the big six, EDF, yesterday announced its gas and electricity prices are to rise by 3.9% from January. It will mean households not on fixed price tariffs will face increased bills of about £49 a year, taking them to around £1300 annually.
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