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Business News

E.ON fuels consumer outrage with higher bills

E.ON became the fourth of the "big six" energy giants to put up its prices yesterday, adding to consumer outrage over spiralling household bills.

The German-owned utility is raising its gas prices by 18.1 per cent, electricity by 11.4 per cent, and dual fuel by 15.2 per cent.

The rises, which will apply from the middle of September, follow similar-sized increases from Scottish Power and Scottish and Southern Energy in recent months, and rises of 16 per cent and 18 per cent from British Gas in July. Of the major suppliers, only Npower and EDF have not increased their bills, though both are expected to do so in due course.

E.ON yesterday echoed its rivals' earlier justifications, blaming wholesale energy price rises of 30 per cent over the year so far.

"Uncertain times have had a huge effect on wholesale prices, with events in Japan and Libya all having a dramatic effect on gas and power prices in a relatively short period of time," said Graham Bartlett, the managing director of E.ON Energy Solutions.

But consumers gain little comfort from suppliers' explanations. According to calculations by price comparison website Energyhelpline.com, the hike will add £170 per year to the average E.ON dual fuel bill and plunge an extra 140,000 homes into fuel poverty.

"Even though this price rise wasfairly predictable, the scale of it will stun E.ON customers," Paul Green, the Energyhelpline chief executive, said.

Consumer groups point out that wholesale energy prices have fallen sharply since 2008, while domestic electricity bills have gone up by about 40 per cent and gas charges by 34 per cent over the same period.

"Consumers are desperate about rising prices," said Joe Malinowski, the founder of TheEnergyShop.com. "But it has happened so many times now, it is almost as if they've given up in the battle with the energy suppliers."

E.ON has already raised its price once this year. And the latest round of increases will leave average energy bills at £1,250 a year, according to Consumer Focus.

"Many consumers worry how they will afford to keep their homes warm this winter given other price rises and flat or falling incomes," Mike O'Connor, its chief executive, said.

Regulator Ofgem is currently reviewing the energy market, and considering how to impose a string of reforms including more straightforward tariff structures on the industry.

In the meantime, ever-rising prices are adding to calls for a Competition Commission inquiry.

Mr O'Connor added: "The regulator must be prepared to act if it can't say for certain whether prices are fair."