E.On cuts gas costs as complaints keep flowing

The Big Six energy companies are in the dock over overcharging claims

Critics say E.On's price cut isn't sweet enough (Sean Gallup | Getty Images)

E.on finally followed British Gas by announcing a cut in domestic gas prices by 5.1 per cent from February but promptly walked into a storm yesterday.

The move reignited complaints that the big six energy firms have been overcharging consumers in the face of falling wholesale prices, which fell 23 per cent last year.

“Suppliers need to play fair with customers and start passing on the major savings they have been making from cheap wholesale costs," said Citizens Advice chief executive Gillian Guy.

MoneySavingExpert Martin Lewis said: “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.”

E.on boss Tony Cocker defended his company’s actions blaming “uncertainties and other factors” for the continuing high cost of domestic energy.

He said: "We 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.”

But one former energy trader who declined to be named said the big energy firms have a “dirty” secret. “They buy energy in advance to lock in prices and claim it helps ensure consumers don’t get clobbered by massive price hikes. But they’re simply passing on the risks to consumers rather than taking on the burden themselves.”

Wholesale prices have hit a five year low which led to accusations that energy firms are overcharging by as much as £300 a year.

Last week Ofgem chief Dermot Nolan admitted: “The market is not working as competitively as it should be … I think [energy companies] are overcharging in many cases.”

The domestic energy market has been referred to the Competition and Markets Authority which is expected to report the results of its investigation in early spring.