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The energy supplier E.On has announced a 5.1% decrease in their standard tariff for their residential customers – the first of the Big Six to do so, despite a huge reduction in wholesale costs over the last few months.

Cheapest deal

E.On have stated that they expect the reduction to result in a drop of around £32 per year for  their customers. Additionally they have claimed that they now also offer the UK’s cheapest fixed tariff at an average price of £783 per year for the one-year product.

The news comes as the Big Six were accused by the energy regulator Ofgem of failing to pass on price reductions to customers. The Chief Executive of Ofgem, Dermot Nolan has said that this seems like a step in the right direction and that this goes some way towards addressing the failure to drop prices despite wholesale price changes.

The price comparison site Uswitch agrees but suggests that consumers should be seeing at least 10% off their bills, or £120 per year on both gas and electricity. This is due to the fact that the wholesale market fell by 24% in the last year.

Market risks

Tony Cocker from E.On has stated that they have to take account of the other costs associated with supply including those risks in the market that they have no control over, including grant schemes for new boilers. It has also been pointed out that the winter so far has been milder than average leading to lowered consumption.