Trust in energy giants 'hits all-time low'

ENERGY company E.ON is raising its fuel bills by 11.4 per cent for electricity and 18.1 per cent for gas from 13 September.

It follows British Gas, Scottish Power and Scottish & Southern Energy in announcing price rises in recent weeks, which the industry blames on a 30 per cent rise in wholesale costs since last winter.

Yesterday's move brought condemnation from Labour, with energy spokeswoman Meg Hiller declaring that the public's trust in fuel providers was at rock bottom.

E.ON has five million customers but said almost 600,000 were unaffected by the rise, including its most vulnerable customers on WarmAssist tariffs.

The company said the average dual-fuel bill for a customer paying with direct debit will rise by 15.2 per cent to 1,190 from next month.

As well as the price increase, E.ON has launched a product for existing customers which will fix prices for two years with no penalty for early exit. It has also guaranteed that there will be no more price increases for Age UK customers for at least a year.

But lobby group Consumer Focus said customers were in the dark about whether the recent round of industry price rises was warranted.

Its chief executive, Mike O'Connor, said: "Customers will feel they didn't get the benefit when wholesale costs were low. Wholesale costs are around a third lower than their 2008 peak, yet consumer prices have reached an all-time high."

He said regulator Ofgem should refer the industry to the Competition Commission if it was unable to say for certain whether prices were fair.

Mr O'Connor added: "It is even more important these questions are answered, with 200 billion of investment needed in cleaner power plants and other low-carbon programmes set to push bills up further.

"If consumers are to stomach such price rises, they need to know they are fair."

It is the second price rise by E.ON this year, after a rise in electricity tariffs by 9 per cent and gas by 3 per cent in February.

Labour's Meg Hillier said pay freezes and job losses meant many people have nowhere to find the extra money when the costs of basic heating and hot water go up so much in one go.

She added: "It's time the biggest six energy companies were referred to the Competition Commission. Most people don't understand their energy bills, and trust in the companies is at an all-time low. An external inquiry is needed."

Scottish & Southern has already said its gas prices will rise by an average of 18 per cent and electricity prices by 11 per cent from 14 September.The increase will mean a typical annual dual-fuel bill will rise from 1,094 to 1,265, an increase of 171.

British Gas, which trades as Scottish Gas in Scotland, is to increase its gas and electricity prices by an average of 18 per cent and 16 per cent respectively from 18 August, increasing the average dual-fuel bill by 190 a year to 1,219.

Energy and Climate Change Secretary Chris Huhne said he wanted to wean Britain off its "fossil fuel addiction" so that the country was not at the mercy of international oil and gas markets.

John Robertson, Labour MP for Glasgow North West, who sits on the energy select committee, said: "It's disgusting, but sadly too predictable that companies, or rather energy barons like E.ON, just follow suit and hike up prices, treating customers like serfs.

"It seems that there is an austerity autumn fast approaching us, with the government cuts and these outrageous energy prices rises kicking in at the same time."