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Energy firm E.On to raise prices Two energy firms to raise prices
(about 4 hours later)
Energy firm E.On is to raise gas prices by 26% and electricity prices by 16% on 22 August. Energy firms E.On and Scottish and Southern Energy are to raise gas and electricity prices by up to 29%.
It is the third of the big six energy companies to increase prices for domestic customers during the summer. E.On said it would up its gas prices by 26% and electricity bills by 16% on 22 August for domestic customers.
It blamed an increase in wholesale costs, which it said had risen by more than 51% since February, for the latest rise - the second in a year. Scottish and Southern followed a few hours later by announcing a 29.2% increase in gas bills, with electricity tariffs up by 19.2% on 25 August.
Both blamed an increase in wholesale costs for the latest rises - the second in a year.
E.On said dual-fuel customers would see an average annual increase in their bill of £227.E.On said dual-fuel customers would see an average annual increase in their bill of £227.
The average annual bill for an E.On customer paying by monthly direct debit would be £1,194 following the latest rise, up from £967. The average for those paying in other ways would be £1,259, the company said.The average annual bill for an E.On customer paying by monthly direct debit would be £1,194 following the latest rise, up from £967. The average for those paying in other ways would be £1,259, the company said.
Those paying on a pre-payment meter would face an average annual bill of £1,298.Those paying on a pre-payment meter would face an average annual bill of £1,298.
EDF Energy and British Gas raised their prices for domestic customers in July, and others are expected to follow suit.
'Tough time''Tough time'
Graham Bartlett, managing director of E.On's retail business, said that the company had tried to keep the increases as low as possible to protect customers.Graham Bartlett, managing director of E.On's retail business, said that the company had tried to keep the increases as low as possible to protect customers.
NEW ANNUAL E.ON DUAL FUEL PRICES Average bill paid by monthly direct debit - £1,194 - up from £967Average for cash and quarterly demand payment - £1,259 - up from £1,031Average pre-payment meter - £1,298 - up from £1,097 Source: E.On Price rises differ across the UKNEW ANNUAL E.ON DUAL FUEL PRICES Average bill paid by monthly direct debit - £1,194 - up from £967Average for cash and quarterly demand payment - £1,259 - up from £1,031Average pre-payment meter - £1,298 - up from £1,097 Source: E.On Price rises differ across the UK
"I'm very aware of the effect that today's announcement will have on our customers and I recognise that this is a very tough time for everyone," he said."I'm very aware of the effect that today's announcement will have on our customers and I recognise that this is a very tough time for everyone," he said.
This is E.On's second price rise for domestic customers this year. In February it put up gas bills by 15% and electricity tariffs by 9.7%.This is E.On's second price rise for domestic customers this year. In February it put up gas bills by 15% and electricity tariffs by 9.7%.
The German-owned company has 5.5 million customers in the UK.The German-owned company has 5.5 million customers in the UK.
'Energy shock'
Scottish and Southern Energy's price rises will come into force three days after E.On's increase in tariffs.
"The world is experiencing an energy shock of a kind not seen since the early 1970s," said Alistair Phillips-Davies, the company's energy supply director.
"Energy suppliers have to take steps towards covering their costs and I am sorry that we cannot delay these price rises any longer."
The company, which has 8.8 million customers across the UK, said prices would have gone up more were it not for a dip in the oil price - and in turn wholesale gas prices - in recent weeks.
It added that it would not be putting up costs for consumers again in 2008.
In April, it put up electricity bills by 14.2% and lifted gas charges for domestic customers by 15.8%.
Tim Wolfenden, of price comparison website uSwitch.com, said it was only a coincidence that the two big energy companies had made their announcements on the same day.
In the latest round of price rises in July, EDF Energy put up gas prices by 22% and electricity prices by 17%. Shortly afterwards, British Gas put up gas bills by a record 35% and electricity tariffs for its customers by 9%.In the latest round of price rises in July, EDF Energy put up gas prices by 22% and electricity prices by 17%. Shortly afterwards, British Gas put up gas bills by a record 35% and electricity tariffs for its customers by 9%.
Fuel povertyFuel poverty
Adam Scorer, of watchdog Energywatch, said that the price rises were not a surprise owing to the picture across the industry.Adam Scorer, of watchdog Energywatch, said that the price rises were not a surprise owing to the picture across the industry.
Rising wholesale costs have been blamed for the latest price increases We are extremely concerned that the one in three pensioner households likely to be living in fuel poverty by the end of the year will feel forced to cut back on essential food or fuel Gordon Lishman, Age Concern
"The brakes have come off the market," he told the BBC."The brakes have come off the market," he told the BBC.
He said that the "good times" of self-sufficiency from the North Sea gas supply - which meant the UK's gas prices were the lowest in Europe - were over and so rising prices should be expected.He said that the "good times" of self-sufficiency from the North Sea gas supply - which meant the UK's gas prices were the lowest in Europe - were over and so rising prices should be expected.
He said that consumers were waiting for the government to publish its intentions on tackling fuel poverty and for regulator Ofgem to complete its inquiry into competition in the energy market.He said that consumers were waiting for the government to publish its intentions on tackling fuel poverty and for regulator Ofgem to complete its inquiry into competition in the energy market.
The number of households in fuel poverty would rise to above five million, he added.The number of households in fuel poverty would rise to above five million, he added.
Gordon Lishman, director general of Age Concern, said the latest rises were a "huge blow" to those struggling to pay bills and called for the introduction of fuel vouchers by the government.Gordon Lishman, director general of Age Concern, said the latest rises were a "huge blow" to those struggling to pay bills and called for the introduction of fuel vouchers by the government.
"We are extremely concerned that the one in three pensioner households likely to be living in fuel poverty by the end of the year will feel forced to cut back on essential food or fuel," he said."We are extremely concerned that the one in three pensioner households likely to be living in fuel poverty by the end of the year will feel forced to cut back on essential food or fuel," he said.
'Investment' Investment
E.On said it was helping those on pre-payment meters. It said it was the first energy company to match the prices of pre-payment meter customers and standard customers if they used the same amount of energy.E.On said it was helping those on pre-payment meters. It said it was the first energy company to match the prices of pre-payment meter customers and standard customers if they used the same amount of energy.
Rising wholesale costs have been blamed for the latest price increases
The difference in the average annual price between the payment methods is due to discounts for prompt payment that are only available to standard customers.The difference in the average annual price between the payment methods is due to discounts for prompt payment that are only available to standard customers.
E.On's commercial director Jim Macdonald told the BBC that the industry was spending billions in investment.E.On's commercial director Jim Macdonald told the BBC that the industry was spending billions in investment.
He said E.On was investing more than £200m in a gas storage scheme in Cheshire which would allow it to store gas when prices were lower in the summer and smooth out some of the volatility in wholesale gas prices.He said E.On was investing more than £200m in a gas storage scheme in Cheshire which would allow it to store gas when prices were lower in the summer and smooth out some of the volatility in wholesale gas prices.
Scottish and Southern Energy, Scottish Power, and Npower have yet to raise prices this summer, although they are expected to follow suit in the coming weeks. Scottish Power and Npower have yet to raise prices this summer, although they are expected to follow suit in the coming weeks.
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