E.ON Next has confirmed it is passing on government savings to many customers from April 1
E.ON Next has revealed a major update over some energy bills for customers. The update, which comes into force on 1 April, is expected to cut the typical customer’s gas and electricity costs by £133 if they are eligible.
The energy supplier announced today it had reduced the price of its Next Fixed 15-month tariff. It comes in response to changes announced in the autumn Budget by Chancellor Rachel Reeves.
Last November, she said that households would receive an average £150 cut in energy bills as the Government axed a long-running energy efficiency programme. She announced changes to the levies put on bills. Some campaigners said the move to ditch the energy company obligation – a scheme which provides efficiency measures such as insulation for fuel-poor homes – was “a devastating blow”.
Under the Budget plans, energy bills are set to be lowered by taking 75% of the cost of subsidies for older renewables projects, known as the “renewables obligation”, off electricity bills and into general taxation for the rest of the spending review period. At the time it was forecast that it was expected to save £88 on average. The Government said at the time it would also not renew the ECO scheme, which is paid for through levies on bills, saving £59 on average.
In addition, it said there would be a £7 saving on VAT from the two measures, adding up to £154 off bills for the average household. E.ON said that Next Fixed 15m v15 is now set at £1,835 (down from £1,902) for a standard household using both gas and electricity, with a £50 exit charge per fuel. E.ON Next says it will transfer the full value of savings announced by the Government last autumn directly to its customers.
From 1 April, E.ON Next customers on either fixed or variable tariffs will automatically see their energy bills reduced. The company states this means Next Fixed 15m v15 will be set at £1,702 for a typical household using gas and electricity from 1 April, delivering additional savings of £133.
The ECO scheme that is being axed
The Energy Company Obligation (ECO) scheme was used to fund home insulation and boiler upgrades. Green campaigners said axeing it would cut funding for green homes from £20 billion to £15 billion over the course of this parliament.
The Chancellor defended the move. She said: “It costs households £1.7 billion a year on their bills and for 97% of families in fuel poverty, the scheme has cost them more than it has saved. It is a failed scheme, so I am scrapping that scheme along with taking other legacy costs off bills.”
Yet Ed Matthew, campaigns director at the independent climate change think tank E3G, said at the time: “Cutting taxes from electricity bills is a crucial step towards helping people to switch to clean energy. But this is overshadowed by the morally indefensible decision to scrap the national home insulation scheme ECO.
“This is exactly the kind of sticking plaster politics this government promised to end, and fatally undermines the best long-term solution to fuel poverty. It will also cost 10,000 jobs and prevent one million families from insulating their homes in the next four years.”
For further information, visit eonnext.com
