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E.On cuts standard gas price by 5.1% E.On cuts standard gas price by 5.1%
(35 minutes later)
E.On has announced a 5.1% reduction in its standard gas price for residential customers.E.On has announced a 5.1% reduction in its standard gas price for residential customers.
The company said the cut was the price equivalent of £32 off the average annual bill.The company said the cut was the price equivalent of £32 off the average annual bill.
It is the first of the big six energy firms to announce a price cut this year. It is the first time in six months that any of the big six energy firms have cut their prices.
Pressure has been growing for price reductions in light of big falls in gas and electricity wholesale costs. Last week both the regulator and the Prime Minister expressed concerns that prices were not being cut in line with falls in the wholesale cost of gas.
Industry regulator Ofgem and Prime Minister David Cameron have joined consumer groups in voicing their concerns. E.On also says it has Britain's cheapest fixed energy tariff, with the launch of a one-year dual fuel product with an average price of £783.
The news was welcomed by consumer groups, but some said that prices should be reduced even further.
"With wholesale prices predicted to remain low this year, consumers should be seeing bill reductions of at least 10% - around £120 a year - on both gas and electricity," said Ann Robinson, the director of policy at price comparison site Uswitch.
Cheaper bills
However E.On said it had to take account of other factors apart from wholesale prices.
As a result Tony Cocker, the chief executive of E.On, defended the price cut of 5.1%.
"The underlying position is that whilst the price we pay for our customers' energy has fallen, we also have to take account of managing the various other risks in the market which can change, and the fact that many of the other costs that we don't control - but do have to bear - have increased or may increase.
The move comes after the industry regulator Ofgem, politicians and poverty campaigners expressed concern that large energy companies were not cutting prices despite a sharp fall in the price of crude oil and gas.
Dermot Nolan, chief executive of Ofgem, said last week that domestic gas and electricity prices should be cheaper "for the vast majority of people".
An ongoing investigation by the Competition and Markets Authority (CMA) has been examining the energy market for 18 months.An ongoing investigation by the Competition and Markets Authority (CMA) has been examining the energy market for 18 months.
The chief executive of E.On, Tony Cocker said, "The underlying position is that whilst the price we pay for our customers' energy has fallen, we also have to take into account managing the various other risks in the market which can change, and the fact that many of the other costs that we don't control, but do have to bear have increased or may increase."
E.On said it had Britain's cheapest energy tariff, with the launch of a one-year fixed dual fuel product with an average price of £783.
Director of consumer policy at Uswitch, Ann Robinson, said: "Consumers have patiently waited for over six months to see another big six price cut so this move, while welcome, is long overdue.
"Given the fact that wholesale prices are at a five year low, E.ON customers may well feel underwhelmed by the size of this cut.
"Wholesale electricity costs fell 23% last year, so why have we not seen a single reduction to big six standard electricity tariffs? This is yet further evidence that the energy market simply isn't working for most UK households."