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E.ON urged to cut prices as UK earnings soar 30%

eon energy - big six supplier sees profits jump in the uk

Energy supplier E.ON has reported a 30% jump in earnings in the UK for the first half of this year. Earnings for the first half of 2012 were £245 million in comparison to  £198 million over the same period 2011. According to E.ON the increase is ‘primarily because of improved retail margins’.

Overall earnings more than tripled for the German energy supplier which made made 3.13 billion euros or (£2.45 billion), up from 948 million euros in the same period last year.

The news follows a 23% increase in fellow ‘Big Six’ supplier British Gas’s year-on-year first half profits which lead to calls for price cuts ahead of the coming winter.

E.ON urged to take action

Richard Hall, Head of Energy Regulation at Consumer Focus, said: “E.ON’s profits have jumped by 24% despite it selling off its profitable network businesses last year. Such a big increase, hard on the heels of British Gas profit rises, will leave customers questioning whether the price they’re paying is fair.

“Wholesale prices are now a long way from their peak and E.ON has reported greater margins based on changes in their costs. This will reopen questions on whether falls in wholesale pricing are fed through fairly and fully.

Ann Robinson, Director of Consumer Policy at uSwitch says: “This is further indication that suppliers are benefitting from lower wholesale prices and improved margins.

“E.ON has frozen its prices for the winter, but I would now urge it to go one step further and to cut its prices ahead of winter so that customers can feel some of the benefit of the lower wholesale costs too.

“With over eight in ten households having cut down or rationed their energy use last winter because of cost, any reduction would be welcomed.

“All the big six suppliers trimmed their prices earlier this year, but the recent trading and profitability announcements suggest that they could do more. A second wave of price cuts now will not only help customers to better afford their bills, but would also give concrete proof of the industry’s true commitment to rebuilding trust and confidence with consumers.

“But as we inch towards winter, I would also remind consumers that they too can take steps to cut the cost of their energy. There is currently just over £300 difference between the cheapest and most expensive tariffs on the market.

“This is a substantial saving that can be boosted still further by ensuring that your home is energy efficient too. These two steps offer us all the best protection against the high cost of household energy today.”

Average household energy bills:

Supplier January 2011 Current bill size*
British Gas £1,100 £1,260
EDF Energy £1,046 £1,202
E.ON £1,061 £1,260
npower £1,095 £1,244
ScottishPower £1,211 £1,349
SSE £1,094 £1,235
Average £1,101 £1,258

*Based on a medium user consuming 3,300 kWh of electricity and 16,500 kWh of gas, paying on receipt of bill with bill sizes averaged across all regions.

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British Gas profits – Following a jump in prices British Gas was urged to drop prices.

Gas and electricity prices – Energy prices since 2004.