Energy firms must follow E.ON and cut gas bills, says Citizens Advice

January 26, 2016

Lucy_2 (Custom)By Lucy Palmer-Richeson.

Following energy firm E.ON’s announcement to cut its standard gas price for residential customers by 5.1%, national charity Citizens Advice has said that other energy suppliers should follow suit and improve on its move to save customers money.

E.ON‘s price cut, which comes into effect on February 1st, is the equivalent of £32 off an average household’s annual gas bill. It cuts a standard dual fuel bill to £1,057 a year.

E.ON’s announcement came after the price of wholesale gas and electricity prices fell by 34% over 2015 and criticism toward the Big Six suppliers increased after they failed to pass on the savings to their customers.

Gillian Guy, Chief Executive of Citizens Advice, said: “Wholesale costs are plummeting but consumers aren’t feeling the benefit.

“It is encouraging that E.On is to cut its gas bills but the reduction in savings for people will be modest. The company should also help customers by cutting electricity bills.

“The industry as a whole urgently needs to step up to the plate – suppliers need to play fair with customers and start passing on the major savings they have been making from cheap wholesale costs.”

Some critics say that the cut made by E.ON was long overdue and somewhat “underwhelming”. Ann Robinson, director of consumer policy for price comparison site USwitch, said: “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 per cent 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 is not working for most UK households.”

Tony Cocker, E.On’s chief executive, defended the price cut, saying: “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.

“Once you’ve built in various uncertainties and other factors, whilst the wholesale market movements may translate across to a dual fuel domestic bill for a drop in prices of under 10 per cent, the inclusion of those other factors translates the percentage to the standard gas cut announced today. We will continue to keep all these factors under review.”