July 31, 2020 / 4:14 PM / 8 days ago

E.ON sees cheaper UK gas, electricity bills due to wholesale market drop

LONDON, July 31 (Reuters) - Customers in Britain could benefit from at least an 85-pound ($112) reduction in their annual energy bills from this autumn due to a drop in wholesale gas and electricity prices, utility E.ON UK said on Friday.

The coronavirus pandemic has slashed energy demand this year, helping to push gas and electricity prices in Europe to record lows.

"Whilst wholesale prices have continued to fluctuate in recent weeks, we saw significant falls since the start of the year driven by COVID-19 and the subsequent lockdown around the world," said Michael Lewis, E.ON UK Chief Executive.

"That dramatic fall in demand ... caused wholesale energy markets to fall rapidly since the price cap was last amended at the start of this year. Because of this we expect a significantly lower level when Ofgem updates the price cap next month. Such a move also means customers should see the benefit of lower bills in time for the colder months of the year."

The 85-pound reduction in bills is an equivalent to a 7.5% cut in energy prices, or almost four weeks' energy use for an average UK home, E.ON statement said.

In August, the Office of Gas and Electricity Markets (Ofgem) will set out the level of its latest market-wide cap that will be effective from October.

E.ON said the 85-pound calculation was based on the average annual consumption values across Britain for customers paying by direct debit.

$1 = 0.7615 pounds Reporting by Ekaterina Kravtsova; Editing by Mark Potter

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