Energy Firm Announces Gas Price Cut

E.ON has become the first UK energy supplier to react to falling wholesale prices by announcing an average 3.5% cut in gas tariffs from today.

The firm, which has £4.5 million household customers, said the move is equivalent to £24 off the average annual gas bill, or two weeks' gas use.

E.ON UK chief executive Tony Cocker said Labour's proposed "price freeze'' meant the company was "undoubtedly taking a risk'' by cutting tariffs.

Labour wants to give regulator Ofgem the ability to force companies to pass on falls in the price of wholesale oil and gas to consumers, which industry estimates claim could knock £136 off the average bill.

E.ON also launched what it said was the country's cheapest energy tariff, a new one-year fixed dual-fuel product with an average annual price of £923. Mr Cocker said: "Today's 3.5% cut to our standard gas price and the launch of the UK's cheapest energy tariff, our one-year fixed product, demonstrate that we fundamentally believe in doing the right thing for our customers.''

The move increases the pressure on the other Big Six energy suppliers - British Gas, SSE, Scottish Power, EDF and npower. Mr Cocker said: "Given the possibility of a price freeze, we are undoubtedly taking a risk today but we always put our customers first. That was in the forefront of our minds before Christmas when we began the detailed process of delivering today's price cut.

"We have made this decision knowing that our ability to recover costs, should the market outlook change in the months or years ahead, may be limited but we urge all political parties to recognise the realities of the energy industry and help us to continue to do the best for all of our customers.''