Energy bills set to soar with E.ON price hike

E.ON said on Friday its prices for electricity and gas would be increasing from 13 September, as the company joins others in significantly increasing the cost of utility bills.

With prices for electricity rising by 11.4 per cent and 18.1 per cent for gas, the supplier follows British Gas, Scottish Power and Scottish and Southern Energy in announcing price increases in recent weeks.

The industry has blamed the hike on a 30 per cent rise in wholesale costs since last winter, although consumer groups have raised concerns about whether price rises are warranted.

E.ON has around 5 million customers but said almost 600,000 were unaffected by the rise, including its most vulnerable customers on WarmAssist tariffs.

The average dual fuel bill for a customer paying with direct debit will rise by 15.2 per cent to £1,190 from next month, E.ON said.

Are prices fair?

As well as the price hike, E.ON has launched a product for existing customers which will fix prices for two years with no penalty for early exit. It has also guaranteed no more price increases for Age UK customers for at least a year.

Lobby group Consumer Focus said on Friday that customers were still in the dark about whether the recent round of industry price rises was justified.

Wholesale costs are around a third lower than their 2008 peak, yet consumer prices have reached an all-time high. Consumer Focus

Consumer groups have recently criticised the industry for being quick to hike prices, while being less inclined to lower prices when wholesale costs drop.

“Customers will feel they didn’t get the benefit when wholesale costs were low,” Chief executive Mike O’Connor said.

“Wholesale costs are around a third lower than their 2008 peak yet consumer prices have reached an all-time high.”

He called on the regulator Ofgem to refer the industry to the Competition Commission if it is unable to say for certain whether prices are fair.

Mr O’Connor added: “It is even more important these questions are answered, with £200bn of investment needed in cleaner power plants and other low carbon programmes set to push bills up further.

“If consumers are to stomach such price rises, they need to know they are fair.”

E.ON Director Graham Bartlett defended the company’s decision, saying the fixed price deal would benefit customers.

“I know that this is hard for customers and want to help them avoid future price volatility, which is why we’ve launched our new two-year fixed price deal,” he said.

Fuel poverty

In July, Government figures showed that a million more households were pushed into fuel poverty in 2009, the latest year for which data is available.

The number of UK households suffering from fuel poverty reached 5.5 million in 2009. In England, there were four million fuel-poor households, up from 3.3 million in 2008.

Consumer Focus warned that the latest increase in prices could force as many as 6.4 million homes into fuel poverty in the coming months, with the elderly and vulnerable most likely to be affected.