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E.ON customers face 9.4% tariff hike in January

By Katie Anderson on December 11, 2012

E.ON has followed the lead of the five other leading energy firms in the UK by announcing plans to increase energy tariffs.

The energy firm, one of the so-called Big Six, had resisted the temptation to raise prices in October after promising customers that its tariffs would remain unchanged in 2012. On Monday, however, E.ON announced that gas tariffs would rise by 9.4 per cent and electricity tariffs by 7.7 per cent from the 18th January 2013. Dual-fuel customers will see bills increase by 8.7 per cent.

Announcing the increase, Tony Cocker, Chief Executive of E.ON, said: “We have held back from increasing our prices for as long as we possibly could and at the same time have worked hard to reduce our own costs as a business so that our customers can get the best price possible”.

Although E.ON gained favour with customers for postponing the increase until January, the supplier is unlikely to impress many with a price hike that is rather steep compared to other firms. This winter, Scottish Power increased both gas and electricity tariffs by 7 per cent, whilst British Gas introduced an increase of 6 per cent. The biggest rise came from EDF, which increased energy tariffs by 10.8 per cent.

Each of the leading energy suppliers blamed rising fuel bills on climbing wholesale prices. E.ON also made clear that government-backed schemes, such as free loft insulation and cavity wall insulation for eligible homes, were partly responsible for the increase. Mr Cocker refused to be drawn on how much profit E.ON had made in 2012, stating that the firm’s residential operations barely managed to break even last year.

Whilst delaying the tariff increase until late January will help thousands of households this Christmas, E.ON has exposed itself to more public scrutiny by announcing a price rise at a different time from the other leading suppliers, which rarely operate in isolation. Ofgem recently accused the Big Six of manipulating the energy market to fix prices and squeeze out small operators.

Audrey Gallacher, Director of Energy at Consumer Focus, noted that all industries pass on wholesale costs to consumers, but that energy firms need to do more to explain why tariffs rise so frequently. The apparent disparity between rising fuel bills and increasing operating profits may be somewhat more difficult to justify.