E.on has announced it is to cut gas prices by 5.1%, making it the first of the big six providers to drop prices this year. But even after that, its standard tariff will cost on average over £250/yr more than the cheapest.
The big six supplier, which has 4.5 million customers, says two million will see bills drop when the price cut comes in on 1 February, by an average of £32/year. From then, the average price for a typical user on E.on's standard tariff will be £1,047/year.
However, with many able to save far more by switching now to a cheaper deal, you should use our free Cheap Energy Club to find the cheapest tariff for you.
The price cut – which is for gas only, not electricity – will apply to all those on E.on's standard tariff. If you're already on one of its fixed tariffs, you won't see a price cut unless you switch tariff.
But E.on has also today launched two new fixed tariffs, including a one-year fixed dual-fuel tariff which is now the market's overall cheapest. See our Cheap Gas and Electricity guide for how the cheapest tariffs stack up.
The 1 February price cut will also apply to E.on's prepay tariff, with the average cost for a typical user falling from £1,160/year to £1,128/year – though again, many will be able to save by switching. See the Cheap Prepaid Gas and Electricity guide for more info.
'Most households in the UK are massively overpaying'
Martin Lewis, founder of MoneySavingExpert and Cheap Energy Club, says: “All price cuts are welcome, even if they’re just 5% on gas only. Yet the true revelation of this announcement is that it shines a light on the fact that most households in the UK are massively overpaying for their energy.
“Even after this cut E.on customers on standard tariffs with typical bills will be paying around £1,050 a year, and those from other firms even more. Yet the market’s cheapest tariff for switchers also by E.on is just £783/year for typical usage. The message is quite simple, you’re being ripped off – do a cheap energy comparison and ditch and switch now.
"As for the rest of the firms, I expect them yet again to bleat like sheep and follow with more cuts of a similar scale. Yet no one should be waiting for that – if you’re on a standard tariff, they’d have to cut it by 25% before it was the same price as the cheapest deal, and that isn’t going to happen. So again, find your cheapest tariff now.”
Pressure on firms to cut prices
Today's price cut announcement comes amid intense pressure on energy firms to cut their bills, with the Prime Minister last week calling for a price cut to reflect the fact that wholesale energy costs are at their lowest for five years.
Tony Cocker, chief executive of E.on UK, said: "Today's action once again makes our standard tariff the cheapest variable offering of any of the larger suppliers and our new one-year fixed tariff is simply the cheapest product of its type on the market today."
He added: "The underlying position is that whilst the price we pay for our customers’ energy has fallen, we also have to take account of managing the various other risks in the market which can change, and the fact that many of the other costs that we don’t control but do have to bear have increased or may increase.
"Once you’ve built in various uncertainties and other factors, whilst the wholesale market movements may translate across to a dual fuel domestic bill for a drop in prices of under 10%, the inclusion of those other factors translates the percentage to the standard gas cut announced today. We will continue to keep all these factors under review."