E.ON announced a price rise of 4.8% in June 2018. This was the second price rise from the supplier, which announced removals of discounts that equated to a rise of 7.6% earlier in the year.
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E.ON will raise the price of its standard variable rate tariffs by £55 on average for around 1 million dual fuel customers, effective 16 August 2018.
The big six supplier is blaming rising wholesale costs for gas and electricity for the hike.
This is the third price rise in 18 months from E.ON — totalling a 16.5%, or £171 rise in costs for customers:
- In March 2018, E.ON announced changes to the discounts it offered some of its customers as well as increasing standing charges for those paying by cheque or cash quarterly.
- In March 2017, E.ON announced a price rise of 9%.
How much will these E.ON price rise cost me?
As a result of the E.ON price increases in 2017 and 2018, roughly 1 million customers will have to pay an extra £171 a year.
The E.ON price increases means that the average dual fuel customer will pay up to £1,153 for their dual fuel standard tariff — about £400 more than the cheapest energy deal available as of the latest announcement.
A 'kick in the teeth' for energy customers
Commenting on the news, energy expert Claire Osborn said of the E.ON price rise news:
“Customers will be forgiven for thinking they had seen the last of the big six price rises this year so yet another increase from E.ON is a kick in the teeth for the million customers affected.
“Wholesale prices have soared recently, putting pressure on energy companies. For customers with other suppliers who are worried they will also suffer a second price rise, now is the time to say enough is enough. Some E.ON customers have now seen three increases totalling over £170 in the last 15 months, and now face bills £411 higher than the cheapest on the market.
“The sun may be shining and you may be starting to plan your summer holiday but if you don’t want to come home to a sky high energy bill then switch and fix your tariff now. Five million homes switched last year and it looks like even more are taking control of their bills in 2018. No matter who you’re with, there’s no need to pay more than you need to for exactly the same gas and electricity.”
What can I do to avoid the price rise?
Variable rate energy plan
Fixed rate energy plan
If you're on a variable rate plan with E.ON then your energy prices will rise. So it's a good idea to run an energy price comparison as soon as possible to find the best deal for you. And if you switch to a fixed rate plan you can protect yourself from future price rises for the length of your deal.
There's good news if you're on a fixed rate plan, as you'll get to avoid the E.ON price rises for the time being. However, be wary of complacency setting in. This is because when your fixed term comes to an end, you'll be automatically placed onto a default tariff, making you vulnerable to price rises like the one just announced by E.ON. Make sure to compare the market regularly to see if you can get a better deal.
Why did E.ON raise their prices?
In nearly all of the cases of 2017 and 2018 price rises, energy companies have put the blame firmly at the door of rising gas and electricity costs in the wholesale energy market. However, unlike its big six competitors, in 2017, E.ON has said that the price of wholesale energy has actually decreased and instead blames its 2017 energy price rises on government schemes, such as renewable subsidies.
E.ON said the cost of participating in such environmental and social programmes has risen by about 36% compared with the year before. In defending its price rise, E.ON argued that these factors were beyond its control, and said this was the first time they had increased prices for over two years.
In June 2018, Michael Lewis, Chief Executive of E.ON UK, said:
“We had hoped that by making the structural changes we made earlier this year ... we could avoid an increase in our unit price. Those changes applied to all tariffs, not just our standard variable tariff, and reflected cost changes as we saw them at the time as well as bringing our tariff structure in line with most of the market.
“However, as was seen in relation to the increases in the regulated prepayment cap in April, a number of costs have risen quite sharply and in particular we’ve experienced a hike in the price we have to pay for the energy our customers need, partly driven by the Beast from the East and extreme weather conditions experienced earlier this year. Through advanced purchases we had been able to shield our customers from some, but not all, of this impact."
Lewis went on to state that E.ON would continue to notify customers about other tariffs available (via their bills, as required by Ofgem) and promote services available to bring energy use down including smart meters and energy efficiency measures.
Previous price changes from E.ON
Announced in early March 2017, the news of E.ON's price hike came amidst a flurry of price rise announcements that followed a winter of price freezes from the big six.
E.ON's price rise of 9% - 4% for gas and an eye-watering 14% for electricity - makes it number four of the big six to announce that, as of March 2017 (past the promised months of frozen prices), it would be increasing prices for customers on variable rate energy plans.
All of the big six did eventually go on to raise their prices in 2017, with British Gas holding out until September 2017.
In December 2016, E.ON announced it would freeze prices for standard rate customers for the winter months.
Previously, E.ON had announced a 5.1% price drop that took effect 1 February 2016.
In late January 2016, E.ON was the first of the big six to offer a price cut for the year. Within a month, the rest of the big six had announced cuts of their own:
This was the first price cut announcement from a big six energy supplier since August 2015, when British Gas announced their second price cut for that year.
At the same time as the price cut announcement, E.ON launched the cheapest fixed plan on the market, which was soon undercut by SSE. And though E.ON re-launched their plan at an even cheaper rate, both SSE and E.ON were in turn undercut by Extra Energy within the week.
Which energy suppliers raised their prices in 2017?
Along with E.ON all of the big six energy suppliers raised their prices in 2017. Most of the 2017 energy price rises happened in March, but British Gas waited until September after promising to freeze prices until August 2017.
- SSE's electricity rates increased in March 2017 by 14.9%.
- Npower raised its standard tariff electricity prices in March 2017 by 15% and gas prices by 4.8%.
- ScottishPower's dual fuel standard rate tariffs from March 2017 increased by 7.8%, consisting of a gas price rise at 4.7% and electricity at 10.8%.
- EDF Energy's energy prices rose twice in 2017, increasing dual fuel prices by 1.2% in March 7.2% in June, however they cut gas prices by 5.2% at the start of 2017.
- British Gas raised electricity prices by 12.5% in September 2017 after stating they would freeze prices until August 2017.
Will E.ON raise energy prices in 2018?
As mentioned, technically, E.ON has already raised its energy prices in 2018. E.ON announced they would be making changes to their tariff structure in March 2018, taking effect 19 April, 2018. While E.ON has not increased the cost per unit of gas and electricity for its customers, it has removed some of the discounts offered on standard variable tariffs. This means those customers will see a rise of 2.6% on their energy bill, taking a typical annual bill to £1,153.
As a result of E.ON's billing changes, the average annual increase for their customers will be £22, but one in four households on standard variable tariffs will have to pay an extra £50 a year.
E.ON has claimed that the change in prices was designed to simplify tariff charges, but consumer watchdogs and government sources are calling it a hike on household bills.
If you are on a standard variable tariff with E.ON then now is a good time to compare the energy market and run an energy price comparison and see how much you can save on your household bills in 2018.