E.On hikes dual fuel energy prices by £97 - and the government says it's "prepared to act"

 
Courtney Goldsmith
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E.On has banded with the likes of ScottishPower and Npower in hiking its prices (Source: Getty)

E.On is hiking its energy prices because of increasing costs to social and environmental schemes - and ministers have responded with a word of warning to the industry.

The Germany-based company said prices for dual fuel customers will rise 8.8 per cent from 26 April, affecting 62 per cent of customers, or 2.5m people.

"Wherever markets are not working for consumers, this government is prepared to act," said a spokesman for the Department for Business, Energy and Industrial Strategy (BEIS), responding to the price rise.

"We expect energy companies to treat their customers fairly and continue to be concerned by these price rises which will hit millions of people already paying more than they need to," he said. However, he gave no details on what the government could do.

Bills are set to rise £97, from £1,057 to £1,154 a year, as standard electricity prices increase by an average of 13.8 per cent and gas prices increase by an average of 3.8 per cent.

The cost of supporting various renewable energy programmes and helping customers use less energy has jumped 36 per cent, E.On said. The firm added it partially offset the increase by hedging the cost of energy purchased on the wholesale market and "some other factors".

This is the company's first price hike in more than three years, during which time it lowered its standard variable gas prices on two occasions, E.On said.

"This is the first time since January 2014 that we have increased our standard variable prices. It is an announcement we never want to make," said Tony Cocker, chief executive of E.On UK.

The firm joins the likes of ScottishPower, Npower and EDF, which have recently announced similar price rises. British Gas has broken rank and instead extended its price freeze until August.

"E.On delivered yet another bitter blow to households this morning as it announced a monstrous price rise," said Mark Todd, co-founder of energy price comparison site, EnergyHelpline.

Todd added: "16 UK energy suppliers have now announced hikes to their prices with more set to follow as the market shifts upwards by around 8 per cent."

Ed Molyneux, head of research for consumer collective at TheBigDeal, said: "When wholesale prices fell people never saw cuts in their prices as big as this rise. Once again the Big Six put their profits before their customers."

E.On also noted a series of measures it will take to encourage customers on typically high priced standard variable tariffs to shop around for an alternative.

Cocker said: "We will be sending more than three million letters to customers this month with personalised savings messages making it clear how easy it is to swap to another tariff that might offer cheaper prices.

"In addition we will also be working to contact a number of potentially vulnerable customers currently on our standard variable tariff with a personalised quote for an exclusive product, which will be E.On's cheapest tariff."

Stephen Murray, energy expert at MoneySuperMarket, said the average standard variable tariff is more than £200 more expensive per year than the best fixed deals on the market.

Read more: Bright idea: Here's why Britain's energy market needs reform

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