The firm has also launched a best buy 1-year fixed tariff with a typical cost of £923, throwing down another gauntlet to its competitors.
The move will bring New Year cheer for E.On customers who will see their overall (gas and electricity combined) energy bills fall by 2.1%, or around £24 per year.
If they pay via monthly direct debit the average bill will be £1,145.
If they pay quarterly by cheque or cash the average bill will be £1,215.
On Monday, January 19, British Gas also reacted to falling wholesale prices - reducing standard gas prices by 5%, and saving 6.8million of its customers (including those on Fix & Fall tariffs) an average of £37 a year. The cut takes effect from February 27.
‘Doing the right thing’
Tony Cocker, E.On’s chief executive, said the cut – which could trigger similar moves from its Big Six rivals British Gas, EDF, nPower, Scottish Power and SSE – demonstrates his firm believes in “doing the right thing” for its customers.
BUT, even with today’s price reduction, there are still many more-competitive deals to be had – not least E.ON’s new fix.
Here’s everything you need to know…
‘A long time coming’
Stephen Murray, energy expert at MoneySuperMarket, said: “To say it’s been a long time coming would be the understatement of the year, but finally one of the nation’s Big Six suppliers has responded to the falling price of wholesale gas and given bills the chop.
|“...finally one of the nation’s Big Six suppliers has responded to the falling price of wholesale gas...”|
“While this announcement is welcome, it is underwhelming in the face of wholesale prices falling around 20% over the past year. Anyone still languishing on standard tariffs should take action, as bigger savings are easily available.”
For example, an average monthly direct debit customer can benefit from savings of up to £222 per year by switching to E.On’s market leading Energy Fixed 1 Year tariff, launched today with a typical cost of £922.99.
Standard quarterly cash and cheque customers can make a greater saving (a massive £292 per year) by switching to the same tariff.
Make your own price cuts
Today’s price cuts from E.On only apply to its standard gas tariff (which forms part of a ‘dual fuel’ deal for many customers.
Standard tariffs are typically the most expensive, and so anyone on a standard energy tariff can probably save by switching to something more competitive.
Fixed tariffs are still a sensible way to go, particularly if there are no exit fees because you’ll get a guarantee that your energy prices won’t go up while you’re on the tariff, even if energy prices start rising generally.
The new 1-year fix from E.ON does come with exit fees, but at only £5 per fuel, so if a better deal comes along before the year is up, it’ll only cost you £10 to leave.
Some fixed tariffs either have no exit fees, while others have fees of £25 or £30 per fuel.
When reviewing your options, you should also consider the cost of separate single fuel tariffs for gas and electricity, which in some circumstances can work out cheaper than a dual fuel deal.
As it stands, here are the top 10 fixed-rate tariffs, based on a medium consumption (13,500 kWh Gas, 3,200 kWh Electricity).
|Provider||Tariff||Rate Type||Average Bill||End date||Exit fee|
|E.ON||Energy Fixed 1 Year||Fixed||£922.99||1 Year||£5 per fuel|
|Extra Energy||Fresh Fixed Price Jan 2016 v6||Fixed||£934.00||31/01/2016||£25 per fuel|
|Extra Energy||Clear Fixed Price March 2016 v3||Fixed||£935.00||31/03/2016||£25 per fuel|
|First Utility||iSave Fixed v42 March 2016||Fixed||£935.49||31/03/2016||£30 per fuel|
|Extra Energy||Bright Fixed Price Jan 2016 v7||Fixed||£937.00||31/01/2016||£25 per fuel|
|Co-operative Energy||Fair and Square March 2016||Fixed||£937.76||31/03/2016||£30 per fuel|
|Npower||Fixed Energy Online April 2016||Fixed||£962.66||30/04/2016||NA|
|Scottish Power||Online Fixed Price January 2016||Fixed||£970.00||31/01/2016||NA|
|OVO Energy||Better Energy Fixed (Online) (NOTE - Not Scottish Hydro)||Fixed||£973.00||1 Year||£30 per fuel|
|Green Star Energy||Rate Saver 12 Months Fixed version 1412 Paperless||Fixed||£987.16||1 Year||£30 per fuel|
Our energy comparison tool literally takes a couple of minutes, and will tell you if there’s any money to be saved by switching. Click here to get started.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
* 51% could save at least £199, MoneySuperMarket Data, September 2014