Other energy suppliers must follow and improve upon E.ON’s “long overdue” move to cut its standard gas price to reflect falling wholesale prices, consumer groups have said.
E.ON is to cut its standard gas price by an average of 5.1 per cent from 1 February, which it says is the equivalent of £32 off an average annual gas bill.
The announcement comes as wholesale prices for gas and electricity fell to their lowest level for five years and follows mounting criticism that companies are failing to pass the drop on to customers.
Citizens Advice chief executive Gillian Guy said that while E.ON’s cut was encouraging, the savings for customers would be “modest” and the energy giant also needed to lower electricity bills.
Ms Guy said: “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.”
Which? executive director Richard Lloyd said E.ON had taken the first step by cutting its prices for gas deals “but given plummeting wholesale costs, consumers are bound to question if it’s enough”.
Price comparison website USwitch also said E.ON’s customers may feel “underwhelmed” by the size of the cut.
Ann Robinson, USwitch’s director of consumer policy, said E.ON’s move was “long overdue” and added that bill reductions of at least 10 per cent, or around £120 a year, on gas and electricity would more accurately reflect the fact that wholesale prices were at a five-year low.
The mild winter and lower commodity prices have led to further drops in wholesale gas and electricity costs, according to the ICIS Power Index, which analyses energy markets.
The report, released last week, said UK power prices finished the year at five-year lows, and were down 23 per cent over the year.