The energy firm E.On has announced that the price of their standard dual fuel tariff will increase by 4.8%
An average customer for both gas and electricity will see their fees rise by £55 per year. A gas only customer would expect to see an average rise of £19, and an average electricity customer would see a rise of up to £36.
The firm has been hit by a heavy increase in wholesale energy costs in the second quarter of 2018, as have the other five of the Big Six energy firms, all of whom have announced price hikes in the last few months. Ofgem’s energy index, which tracks prices, has charted a rise of 5.3% in the three months between February and March this year, with a 14.1% increase on average over the year up to May 2018. High wholesale costs have forced all energy firms to re-evaluate their prices, whether by charging customers more, eliminating bonuses or discounts, or restructuring the way they charge for different costs. SSE, British Gas, Scottish Power, and Npower all announced a rise of over 5%, with EDF hiking costs by an average of 2.7%. SSE’s rise was the highest, at 6.78%, leaving the average customer out of pocket by £76 a year.
All companies will be aware of the government’s cap on standard variable tariffs, due to be introduced by the end of 2018, which would put an end to such price hikes – hence the relative severity of the move by all six firms within short succession.
An E.On spokeswoman said: “Those changes led to the removal of discounts and a change to the standing charge for people who pay on demand by cash or cheque. This is an increase in unit price, which makes us the fourth cheapest of the big six suppliers.” An additional problem for E.On has been a declining customer base, with the number of standard variable accounts at the company declining by 21%.
The company’s chief executive, Michael Lewis, promised continued customer support: “We had hoped that by making the structural changes we made earlier this year, impacting bills by around £22 a year, we could avoid an increase in our unit price. However, as was seen in relation to the increases in the regulated prepayment cap in April, a number of costs have risen quite sharply and in particular we’ve experienced a hike in the price we have to pay for the energy our customers need. We’ll continue proactively to tell customers about the different tariffs on offer and encourage them to move to those tariffs, as well as promoting the different services that can potentially help bring their bills down such as a smart meter, a more efficient boiler or better insulation.”