180,000 E.On business customers to face energy price hike

Energy giant E.On has confirmed that it is writing to 180,000 of its small and medium enterprise (SME) customers to notify them that their energy bills are to rise with effect from the 2 September.

The news comes as the firm also announced it is to increase gas prices for domestic customers by 26 per cent and electricity prices by 16 per cent from tomorrow, in response to wholesale energy prices that have risen by 51 per cent since February.

"The announcements today impact domestic customers, though obviously business customers are also affected by rising wholesale prices as well. We will be writing to our SME customers who are not on fixed-price contracts to notify them of changes to their tariffs," said a spokeswoman for the company.

She said that the increase in businesses bills would vary from company to company, although industry experts predicted average price rises on a similar scale to those announced for domestic customers.

The move makes E.On the third of the big six energy providers to increase prices for domestic customers this summer, following similar announcements from EDF Energy and British Gas.

Paul Green, chief executive of Energyhelpline.com, said that further price hikes were on the cards and that businesses would be affected. " The remaining three providers will put up prices soon and then we'd expect to see another round of rises in January, again in the 22 to 25 per cent range," he said. "Business tariffs will see a similar spike at that time."

Firms should seek to limit the impact of rising prices by giving notice on their current energy contracts and shopping around for better deals, according to Green. "If you don't give notice soon and you are not on a fixed-price contract you will be automatically hit by the increases," he said. "But if you give notice you can shop around and may even get a better deal from your current supplier."

He added that the rise in prices would also serve to make spending in energy saving technologies and initiatives more attractive as return on investment periods shorten.

In related news, wholesale gas prices in Britain jumped nearly 15 per cent yesterday after a leak in a North Sea pipeline raised fears over supply.

Norwegian oil company StatoilHydro said that the pipe, which pumps an estimated five per cent of Norway's gas output, would be out of operation until next spring.

Green said that the impact of problems with one pipeline on wholesale prices highlighted the current volatility of the energy market and the growing concerns over supply security.