Eon UK blames January price cut for 6 per cent turnover dip

Big six supplier Eon UK has blamed a £300 million fall in its turnover from January to September this year on the 3.5 per cent cut it made to standard gas prices in January.

Eon UK said in its interim financial results today that the decrease in prices and a continuing competitive environment in the business market has reduced turnover for the residential and business supply businesses by around 6 per cent to £5 billion from £5.37 billion in the same period last year.

Eon UK was the first energy company to cut its prices in January, cutting the cost to consumers by 3.5 per cent.

However Eon UK said profit has remained relatively steady, dropping by just £2 million to £156 million from £158 million last year.

Eon UK said this is largely due to reduced spend on its energy efficiency obligations having already met the targets ahead of schedule.

Eon UK chief executive Tony Cocker said: “We demonstrated in January that we fundamentally believe in doing the right thing for our customers and cut the price of our standard gas tariffs.”

“Increasing competition within the energy market means we’re working even harder to provide the services that our customers want, as well as ensuring our business runs as efficiently and sustainably as possible.”

Eon UK has invested £17 million in its smart meter programme in the first nine months of this year, raising the total investment in the supply business by £2 million to £52 million.

Cocker said: “We believe that smart meters will be transformational for the UK energy industry and will help solve some of the frustrations energy customers have today.

“We’ve been installing smart meters for over four years now and so far we’ve fitted more than half a million in our customers’ homes and businesses.

“As well as setting up a smart metering centre of excellence in Nottingham with specially trained advisors dedicated to helping customers with smart meters, we’ve continued to invest in our IT systems and processes to help ensure we have the capabilities we need to ensure an efficient mass rollout.”

Earlier this week Eon was forced to make a £7 million pay out after failing to provide advanced meters to 35 per cent of its business customers on time.

It faces a further £7 million fine and a sales ban if it fails to meet its new interim target.

The supply company’s German parent company Eon also posted a £57 million rise in generation profits to £338 million from £281 million in the same period last year from its UK generation assets.

Eon’s 1369 MW of installed renewable capacity in the UK contributed £182 million to overall profit.

Cocker said: “Between January and September this year we spent £206 million on renewable assets and we’ve commenced work on the £1.3 billion Rampion offshore wind farm which will be situated 13km off the Sussex coast.

“We’ll continue to diversify our investment in new and existing plant as we firmly believe that it’s important to have a broad range of generation assets as we move to lower carbon technologies.”