Energy bills could reach £2,000 by 2016

Following past, substantial price increases, UK energy bills could rise by a further 60% by 2016, according to industry regulator OFGEM.

The key drivers were volatile gas markets, green taxes, and the need to invest in new power stations, the regulator stated. OFGEM outlined three other scenarios in its new report, which would see prices rise by lower amounts, at between 14% and 25% above inflation by 2020.

Historically, according to OFGEM's analysis, the average annual household gas bill rose by 120% from September 2000 (£365) to September 2009 (£804). Over the same period, the average annual household electricity bill increased by 48% from £299 to £443.

Going forward, the regulator's review observed that up to £200 billion of investment was required to secure energy supplies and to meet UK carbon emission goals.

The report said the future scenario with the lowest cost - with an increase in bills of "only" 14% by 2020 - assumed a slow global recovery resulting in low global oil and gas prices, and internationally-financed green programmes. In this option, high carbon prices and government policies would sustain investment in renewables, nuclear and carbon capture and storage.

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