Today, big six supplier E.ON made two big announcements: first, it would be lowering the price of its standard plan by 3.5% (roughly £24 a year for the average household), and second, it introduced the cheapest plan on the market — undercutting previous table topper Extra Energy by more than £10.
First to cut prices
E.ON is the first supplier to cut prices amidst several calls — from consumer groups and politicians alike — to lower costs for consumers in the wake of dropping wholesale gas costs.
Current customers of E.ON who are on the supplier’s standard plan (E.ON EnergyPlan) will pay, on average, £1,145 (when paying by monthly direct debit).
Cheapest energy deal on the market
Meanwhile, new (and current) customers can switch to E.ON Energy Fixed 1 Year for just £923 per year. It beats the previous best buy table topper Extra Energy by about £10 per year.
The deal carries a £5 per fuel cancellation fee and is fixed for 12 months from the sign up date.
‘Doing the right thing’
Tony Cocker, chief executive of E.ON UK, said this move was about “doing the right thing”:
“Today’s 3.5% cut to our standard gas price and the launch of the UK’s cheapest energy tariff, our one year fixed product, demonstrate that we fundamentally believe in doing the right thing for our customers. This is further evidenced by the fact we are the first supplier to reflect through our standard tariff the overall drop in wholesale gas prices this winter but also that, when our prices had to increase at the start of 2014 to reflect cost increases, for the second year running we announced later than any other major supplier and, on that occasion, at a lower average percentage increase level than any other major supplier.”
While the news is met with applause by many, the question remains: as in price rise times, will other suppliers follow suit?
Ann Robinson, director of consumer policy at uSwitch, said of the announcement:
“With wholesale energy costs continuing to drop, a cut to the standard tariff by a big six supplier is well overdue. Today’s announcement is to be applauded and the other major suppliers must now do the right thing for consumers and follow in E.ON’s footsteps.
“However, given the huge reduction in wholesale prices – which make up around half of energy bills – we believe standard tariffs can and should be cut even further. The question is – is the prospect of Labour’s price freeze to blame for the failure of the big six to cut standard prices until now?
“Today’s move places the big six back in the game. E.ON’s new fixed plan is now the cheapest on the market – and a significant £222 less than their standard deal. Rather than waiting for modest cuts to standard prices, consumers should take control of their bills by switching to one of these more competitive deals.”
Wholesale gas prices drop, but energy bills stay high