E.On accused off 'ripping off' customers despite 5.1% gas bill price cut

E.On said it was cutting the price of standard gas bills by 5.1 per cent from February

E.On said it had to take account of more than just wholesale costs when setting prices (Getty Images)

E.On is still ripping off customers despite gas bill price cuts, according to those campaigning for cheaper energy prices.

E.On said it was cutting the price of standard gas bills by 5.1 per cent from February, equivalent to £32 off the price of an annual gas bill.

But the cut has done little to appease calls to cut energy prices in line with falling wholesale prices. The wholesale price of gas is down 34 per cent over the course of last year, according to ICIS.

Martin Lewis, founder of Money Saving Expert and the Cheaper Energy Club, said that even after this cut, E.On customers on standard tariffs with typical bills will pay around £1,050 a year, and those from other firms even more. He pointed out that the market’s cheapest tariff, also by E.On, is just £783 a year for typical usage.

"The message is quite simple, you’re being ripped off – do a cheap energy comparison and ditch and switch now," Lewis said.

Ann Robinson, director of policy at price comparison website Uswitch, said that a 5 per cent cut was not enough.

“With wholesale prices predicted to remain low this year, consumers should be seeing bill reductions of at least 10 per cent - around £120 a year - on both gas and electricity,” she told the BBC.

E.On said it had to take account of more than just wholesale costs when setting prices. Less than half a standard fuel bill is wholesale costs, E.On said. Transmitting the gas adds another 25 per cent because companies have to pay to use gas pipes.

“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," said Tony Crocker, chief executive of E.On.

Ofgem, the energy watchdog, said last week that competition had not driven down prices for the majority of customers. An ongoing investigation by the Competition and Markets Authority (CMA) has been examining the energy market for 18 months.