E.On to raise energy prices by 3.7%

image captionE.On is the last of the big six to announce a rise in prices

Power supplier E.On has announced an average price rise of 3.7% for dual fuel customers, to take effect in January.

E.On is the last of the big six energy firms to increase its prices.

The rise takes account of the changes to green and social levies, some of which were removed from fuel bills by the government.

The increase will add £48 to the average dual fuel bill, and will take effect on 18 January.

Customers who only have an electricity account with E.On will see prices rise by an average of 3.7%, or £20 a year.

Gas-only customers will be charged an average of 4.6% more, or £37 a year.

Last week, the government announced that changes to green and social levies meant that customers of the big six energy companies would see a £50 reduction, on average, in their bills. This came after many of the large energy firms had announced big price rises over the autumn.

However E.On said the net benefit to its customers would be just £42.

The reason is that it spent less money than its competitors on providing home insulation measures under the Energy Companies Obligation (ECO).

Price freeze

E.On said the changes announced by the government would help to stabilise prices over the next year.

"Whilst there can be no guarantees, the likelihood of further price rises over the next 18 months caused by an increase in the cost of social and environmental obligations has receded due to the recent action taken by the government," said Tony Cocker, the chief executive of E.On UK.

The watchdog Consumer Futures called for further enquiries into the energy market, to help control prices.

"Energy suppliers must do more to help lighten the burden for consumers," said Audrey Gallacher, the director of energy at Consumer Futures.

"Simply relying on the recent levy changes is not going far enough," she said.

British Gas, the UK's biggest energy supplier, has already announced that it will cut prices by 3.2% on 1 January, following the government rebate. That follows a 9.2% increase on dual fuel bills which came into effect on 23 November.

The net effect will be an average £70 a year rise in prices for dual fuel customers, rather than the £123 originally imposed.

EDF is to increase prices by 3.9% on 3 January, a cut which factors in the rebates.

Other big suppliers have promised that the £50 cut will be passed on to customers.

In the case of SSE, that will not be until April 2014.

Two suppliers, EDF and Npower, have indicated they will now freeze prices until 2015.

Npower said prices would not rise before the spring of 2015, unless there is a rise in the wholesale cost of energy.

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