Energy giant E.ON in price pledge

Energy giant E.ON today reassured its five million customers after it pledged to keep residential energy prices on hold this year.

E.ON's pledge came after British Gas owner Centrica last week signalled that further price hikes were on the way as its costs continued to mount.

The German utility giant confirmed that wholesale energy costs are expected to climb but said it will freeze prices for the rest of 2012 as part of a commitment to be fair and transparent.

However, the promise still means E.ON may raise prices at the start of 2013, potentially meaning customers could face higher costs for some of the coldest winter months.

Dr Tony Cocker, chief executive of E.ON UK, said: "Let me be clear - E.ON will not raise residential prices in 2012.

"Earlier this year we cut our prices in a way that helped some 75% of our customers and I hope that the certainty we've given today will show our customers again that we are committed to helping them."

He added that E.ON will continue to help its customers get "energy fit" by insulating homes, installing smart meters and providing "advice that makes a real difference".

Rising energy prices have been a major driver of high inflation that has been squeezing households in recent months.

The big six suppliers, which dominate the market, all cut either gas or electricity prices earlier in the year, but these were not enough to offset hefty hikes the previous year.

E.ON announced a 6% cut in electricity bills in February after an 11.4% hike in its electricity bills and an 18.1% rise in gas prices in September.

Richard Lloyd, executive director at Which?, said: "People tell us that rising energy bills are their biggest financial worry so anything that gives people more certainty can only be a good thing when household budgets are stretched.

"We have already seen one supplier warn that price increases could be on the way, so now is a good time for customers to look at fixed term deals which offer a bit a more security."

Centrica, the UK's biggest energy supplier, last week warned that the trend for retail energy costs "remains upwards", with wholesale gas prices 15% higher for next winter.

Other costs - including transport and distribution, metering, green levies and social costs - are set to add £50 to the cost of supplying the average household this year, it added.

PA