Eon becomes first supplier to raise prices in line with new cap

Eon has become the first supplier to announce a price increase in line with the new level of the price cap on default tariffs.

From 1 April, the typical annual energy bill for the 1.8 million customers on its standard variable tariff (SVT) will rise by £117  – or 10 per cent.

According to Uswitch.com, the tariff will be £286 more expensive than the cheapest deal currently on the market.

Rik Smith, energy expert at Uswitch.com, said: “Predictably, just four days after Ofgem announced it is raising the level of the price cap, we’re seeing suppliers start to raise prices, with Eon hiking bills for customers on its standard variable tariff.

“Eon customers should not fall into the cap trap – a capped deal is not a good deal and standard plans are going to be more expensive in April than before the cap was introduced.

“Standard tariffs were a bad deal at the old cap level and they’ll be an even worse deal at the new level,” he added.

An Eon spokesperson said: “Ofgem’s energy market price cap review set out that price cap levels would increase, driven by rising wholesale and other costs.

“In line with that, we’ll be making changes to our standard variable tariff prices from 1 April and expect to see similar movements across the energy industry.

“Prices will not change for existing customers until then. Over the coming weeks we’ll be writing to affected customers explaining what the changes will mean for them and encouraging them to choose the best tariff for their needs.”

Responding to the rise, Alex Neill, Which? managing director of home services, said: “This hike in energy prices to the maximum level permitted by the price cap from April will be hard to stomach for more than a million households – particularly announced so quickly and when our annual survey shows Eon’s customer service standards leave it languishing towards the bottom of the table of suppliers.

“While there are fewer cheap deals on the market than a year ago, by switching today you could choose better customer service and potentially save almost £300 a year compared to the April price cap level.”

Ofgem announced on Thursday (7 February) that the price cap on default tariffs would rise by £117 to £1,254 per year. The new level will come into effect on 1 April and will be reviewed again later in 2019.

The regulator said rising wholesale costs were responsible for the majority of the increase (£74). It said the allowance for wholesale costs now makes up more than a third (£521) of the overall cap.