E.ON is writing to each customer whose price will change, whenever possible highlighting the individual impact on their own bill.

The average dual fuel price increase is 8.7%, average electricity only price increase is 7.7%, average gas only price increase is 9.4%.

Around 1 in 6 of all E.ON customers are on capped or fixed products and so are not directly affected by these changes.

Over 210,000 E.ON customers have changed their product in the last few months since E.ON launched best deal for customers in September.

Tony Cocker, E.ON Chief Executive, said: "We have held back from increasing our prices for as long as we possibly could and at the same time have worked hard to reduce our own costs as a business so that our customers can get the best price possible. However, some 16 months after our last price increase, and almost a year since we actually cut our electricity prices4, we have had to make the difficult decision to increase our prices.

"In the next few days every customer affected by this price change will receive a letter from us explaining the detail behind this announcement. Wherever we can, we will include the likely impact on the customer's own bill. However, as well as the individual impact, the broader question is not what we are doing but why we are doing it. We have worked hard to reduce our own running costs which include tasks such as reading and changing meters, answering queries and managing our customers' accounts. We also believe our profit levels are fair and will continue to be so. Last year our domestic profit margin was less than 2% and we will make public the amount we make this year when we publish our 2012 results.

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"Unfortunately the other costs which make up energy bills are rising:

•The price we pay for energy on the national and global wholesale markets is higher than it was and next year the Government's Carbon Price Floor will add another charge to electricity bills which we and others regard as simply a tax.

•Network costs are rising too. These are the prices we pay to other companies to use the wires and pipes which transport the energy to your home, which are now more than 10% higher than last year and are expected to climb higher still in 2013.

•The cost of the Government's social schemes, which often focus on providing subsidised or free insulation, have more than doubled in the last twelve months and another increase is expected next year too.

•Finally, the cost of increasing the amount of energy we get from renewable sources such as wind farms, has risen by over 60% when compared with last year. As with the other costs, this is expected to rise in 2013 too.

"Let me be clear, I understand the reasons behind these increases as Britain seeks to reduce energy waste, and invest in both new lower carbon electricity sources and in new or improved gas and electricity networks. However, at a time when family finances are being squeezed hard and energy bills become a bigger part of the weekly spending, it is vital that everyone who takes a share of energy bills explains what that money is for and justifies those rising costs to customers."

(CD/GK)