Millions of E.ON customers will be hit with a 10% hike in their energy bills from April, after the German company became the first of the big six suppliers to announce new tariffs in response to the government’s price cap rising.
The increase comes less than a week after regulator Ofgem lifted the cap on default tariffs to £1,254 a year for a typical household, because of higher wholesale costs.
Comparison sites urged the 1.8 million customers on the company’s default tariff to look for a better deal. The new tariff will be £286 more expensive than the cheapest deal on the market.
E.ON said it was making the increase in line with the decision by Ofgem to raise the cap and predicted other energy suppliers would make similar movements in pricing.
An E.ON spokesperson said: “Ofgem’s energy market price cap review set out that price cap levels would increase, driven by rising wholesale and other costs.”
The big six that control three-quarters of the UK energy market had priced on average £4 below the initial cap of £1,137, which started on 1 January.
The expectation is that the other five large players will follow E.ON’s lead. Companies have to give 30 days’ notice of price increases, meaning all are likely to announce rises in February.
Rik Smith, an energy expert at uSwitch.com, said: “Standard tariffs were a bad deal at the old cap level and they’ll be an even worse deal at the new level.”
The price cap is a flagship government policy that ministers say will ensure consumers pay fair prices and stop firms from exploiting loyal customers on poor value, default tariffs. Ofgem has said it expects the cap to fall in October.