E.On hikes energy costs despite cutting wholesale costs

Energy giant E.On said it plans to increase standard variable dual fuel prices for residential customers due to a rise in costs, even though it has managed to cut the amount it pays for wholesale energy.

Standard electricity prices will increase by an average of 13.8%, while standard gas prices will increase by an average of 3.8%.

E.ON will lift prices from Wednesday 26 April, which is said was for a large part due to increasing policy costs and other costs it does not control.

The German energy giant, one of the UK's big six energy suppliers, has actually reduced the cost it pays for wholesale energy.

It said the hike mainly stemmed from increasing social and environmental schemes.

Chief executive Tony Cocker said it was the first time since January 2014 that E.On had increased standard variable prices.

"It is an announcement we never want to make but is due in large part to the fact that many of the costs we don’t directly control," he said, pointing to programmes including the Renewables Obligation (RO) and Electricity Market Reform (EMR), which are paid for via people’s energy bills.

"We have been able to partially offset some of these rises through our wholesale hedging policy and other means, but we do have to make an increase."

E.On will only contact "a number of potentially vulnerable customers" currently on the standard variable tariff with a personalised quote for an exclusive product, which will be E.ON’s cheapest tariff.

A letter will be sent to potentially vulnerable standard variable customers with a personalised quote for an exclusive tariff, with a simple tear-off permission slip which can be signed and returned to E.ON.