E.On cutting gas prices by 3.3%

Energy firm E.On will cut its gas prices for UK domestic customers by 3.3% - an average of £25 a year - from Saturday, it has announced.

Around 1.8 million E.On customers in the UK will see their gas bills cut, three months after the firm reduced electricity bills by 9%.

It is also scrapping the standing charge for gas prepayment for 200,000 meter customers.

E.On reported an 18% rise in quarterly profits in May.

The German business - Europe's largest energy firm - made a net profit of 2.5bn euros ($3.4bn; £2.2bn) in January to March, up 18% from 2.1bn euros last year.

The German firm said that while it was lifted by the opening of new power stations in Italy and Spain, the recession had hit UK electricity usage.

'Commitment'

Announcing the gas price cut, E.On said it was "committed to offering competitive prices at all times and delivering on our promises".

"It is the right move, in the right direction, but it remains to be seen if it has gone far enough"

The removal of the standing charge - a flat-rate tariff for having a prepayment meter - follows a pledge by the firm to scrap it late last year.

Mark Todd, of switching service Energyhelpline, said: "E.On's pricing decision is further proof that activity in the UK energy market should continue to lead to price falls not price rises.

"Further small price drops are likely to trickle through from other suppliers throughout the summer and autumn."

Will Marples, of Uswitch.com, said: "This cut is welcome news, but consumers who were expecting more will be disappointed.

"It leaves the market pretty much unchanged and puts around £2 a month back into customers' pockets. It is the right move, in the right direction, but it remains to be seen if it has gone far enough."

Wholesale energy prices have plunged since last year's oil price bubble burst. However, E.On said wholesale costs were still 60% higher than they were two years ago.

E.On, EDF Energy, Scottish Southern, Scottish Power and Npower all started providing cheaper electricity for their customers at the end of March 2009.

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