E.ON raises gas prices by 18.1% and electricity by 11.4%

Another 140,000 homes plunged into fuel poverty as E.ON becomes fourth utility company to raise charges E.ON has become the fourth big utility company to announce a jump in energy prices, raising the cost of gas by 18.1% and electricity by 11.4%. The rises, effective from 13 September, are roughly in line with price increases announced in the past two months by Scottish and Southern Energy and Scottish Power. However British Gas has raised its electricity and gas prices by 16% and 18% respectively, just eight months after lifting prices by 7%. This means only nPower and EDF have yet to announce price rises, which could be lower following a continued easing in the cost of wholesale gas and oil prices. Energy prices generally track those of oil, but the price of a barrel of oil has fallen from $118 to $108 in the past few days. Wholesale prices for gas and electricity are down by a third compared to their peak in 2008, according to comparison website TheEnergyShop.com , while the price of a barrel of oil is down 24%. Graham Bartlett , managing director of E.ON Energy Solutions, said in a message to customers: “About half the price we charge for energy is governed by the price we have to pay for it in the world market. And, this year, wholesale prices throughout the industry have soared. According to Ofgem, they’re up by some 30% since last winter.” He admitted that wholesale prices were higher in 2008 than now, but said the trend has been steadily upward and made much worse by events in Japan, Libya and Egypt. “At the same time, our costs for using the infrastructure that gets the energy to your home have gone up too. Of course each bill also includes an element of profit. But it’s nothing like as much as you might think. For every £1,000 our domestic customers paid in 2010, we made £5.” E.ON said it was offering its customers help to counter the price rises, such as advice on insulation and the installation of solar panels for £99. But this will be cold comfort to the 140,000 homes that will be plunged into fuel poverty, where people are paying at least 10% of their income towards heating their home, according to comparison site Energyhelpline . It calculates that dual-fuel customers face paying an extra £170 a year following the increases. Mike O’Connor, chief executive of Consumer Focus , pointed out that although wholesale prices are now about one third lower than in 2008, consumer prices have reached an all-time high. “Yet another price rise will leave the average energy bill £1,250 a year. Many consumers worry how they will afford to keep their homes warm this winter given other price rises and flat or falling incomes. They need to know whether these increases are warranted. Customers will feel they didn’t get the benefit when wholesale costs were low,” he said. He continued: “Ofgem has said it is prepared to refer the energy market to the Competition Commission if necessary. That is welcome but the regulator must be prepared to act if it can’t say for certain whether prices are fair. 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.” TheEnergyShop.com recommends that energy users on a standard deal with no exit penalties switch to a three-year fixed deal from EDF . Joe Malinowski, founder of the website, said: “The fact that E.ON’s new prices are lower than those of the other three suppliers to have announced price changes is no reason to accept them. They are still at a massive premium to current fixed deals, which is where the real value lies. “Customers switching to a fixed price deal to 2014 can save themselves £120-£130 a year – over £300 during the fix. We urge customers to do this now while the opportunity still exists.” Energy bills Household bills Consumer affairs Family finances Utilities Jill Insley guardian.co.uk

Posted by on August 5, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.