Energy giant No5 raises prices, hitting four million families

The firm blamed the increase of 9 per cent for electricity and 3 per cent for gas on "rising industry costs", in particular wholesale energy prices which it says have gone up by 35 per cent since last spring.

It said the price rise would cost the average dual-fuel customer an extra 58.40 a year, or 16p a day, but added it was its first increase since August 2008.

However, comparison website TheEnergyShop.com said the higher prices, which come into force on 4 February, would increase the average bill for an E.ON customer on a standard tariff by 62, to 1,249.

Joe Malinowski, the website's founder, said: "It is clear that the energy suppliers are not taking chances with their profits, and offloading the bulk of their increased costs on to the consumer."

E.ON is the fifth of the "big six" energy companies to have increased prices this winter. Energy regulator Ofgem is currently investigating whether power companies are justified in what they charge domestic customers. The review, the second in three years, is due to conclude in March.

E.ON has 5.5 million customers - 18 per cent and 13 per cent of the domestic electricity and gas market respectively. About four million customers will be affected by the rise in tariffs.

Graham Bartlett, its managing director, said: "It's been over two years since we last increased our prices, and, unlike other companies, we held off from increasing them during the incredibly cold temperatures we saw in late November and December. But we now have no option but to make this change due to increases in the prices we pay for gas and electricity, although our customers won't actually see the increases until next month."

Mr Malinowski said: "2011 is going to be a grim year for energy consumers. The year has just started and consumers are already being asked to find another 60 to 80 just to fund the increases in their energy bills."

Ann Robinson, consumer policy director at uSwitch.com, said: "This is another blow to British households who are financially limping into 2011 following pre-Christmas price hikes and the New Year VAT increase."

Trisha McAuley, deputy director of Consumer Focus Scotland, said: "We are disappointed that hard-pressed Scottish consumers are facing the prospect of higher energy prices. Here in Scotland, heating your home is a necessity, not a luxury, but our already worrying levels of fuel poverty indicate that it is a necessity that is becoming more and more unaffordable.

"Over three-quarters of a million households are now living in fuel poverty, with the number considered to be in extreme fuel poverty growing most rapidly.

"These shocking figures confirm our worst fears about the scale of the problem in Scotland, and show the impact of continuing rises of household energy costs.Price rises such as those announced today, coupled with the coldest December in living memory, are only likely to make this problem worse."

The consumer group said the government should embrace new European Union legislation, which will soon offer the regulator Ofgem the opportunity to force the big six energy suppliers to disclose the price they pay for energy.

PAYING TO BE POOR

Families on low incomes are paying nearly 1,300 a year more for basic goods, services and heating than the better off, according to campaigners.

A report by Save the Children said this was a rise of more than 20 per cent on the previous survey in 2007.

The charity said about a fifth of the "poverty premium" came from fuel bills. Poorer families pay hundreds of pounds extra to keep their homes warm, with an average cost for gas and electricity of 1,135 annually - compared with 880 for other families.

The reason for the difference is that gas and electricity companies routinely charge considerably more for prepayment meters than direct debits - and low income families are often forced to use prepayment meters to manage their budgets.

Fuel poverty is defined as having to spend more than 10 per cent of your income on heating.