Energy bills to soar by £160 but it could be worse, claims government

Energy reforms will add £160 to the average annual household bill by 2030, the government has claimed - but it insisted that keeping the status quo would cost households even more.

Energy Secretary Chris Huhne yesterday unveiled a white paper of proposals which he said would give investors the certainty they needed to invest in nuclear reactors and offshore wind farms - by reducing the UK's reliance on fossil fuels and the impact for consumers of rising gas and oil prices.

First Minister Alex Salmond welcomed the reforms, claiming they would "help realise" Scotland's potential for clean energy generation, despite attacks from consumer groups who warned that Scotland's already cash-strapped householders should not have to foot the bill for the 110 billion investment needed to replace the quarter of UK power stations which were set to close in the next decade.

But he warned that the Scottish Government remained "fundamentally opposed" to the support for new nuclear plants. The SNP has pledged that no new nuclear power plants will be built once the current stock is decommissioned.

"Investment in low carbon energy generation that harnesses our own natural resources will reduce both our reliance on fossil fuel and exposure to volatile global prices," he said.

But environmental groups also criticised the paper's reliance on nuclear power - and warned the plans could scupper Scotland's ambitious renewable energy targets.

"The UK energy system is broken," said Stan Blackley, chief executive, Friends of the Earth Scotland. "Sky-rocketing fossil fuel prices have us all over a barrel and our nuclear power stations seem to require endless public cash injections, yet the UK government's plans appear to pander to the dirty energy companies while holding consumers to ransom with sky-high power bills."

The plans would see companies handed long-term contracts which Mr Huhne said would "guarantee" a stable price for electricity from low-carbon sources such as nuclear and renewables.

Consumer Focus Scotland (CFS) warned that householders, who have been hard hit by a second wave of energy prices hikes in recent weeks, should not be expected to "write a blank cheque to decarbonise electricity generation".

The Department of Energy and Climate Change insisted that leaving the current system in place would cost 200 a year for households.

"Keeping the lights on and cutting carbon emissions comes with a huge price tag," said CFS depute director Trisha McAuley. "We need to confront these challenges and it is clear that there are no easy options. The move towards renewables should eventually make prices cheaper, however, the cost of reforming the market is likely to increase."