E.ON cuts UK gas prices, pressures competitors to follow suit

(Adds minister, consumer body, other suppliers' comments, background)

By Karolin Schaps

LONDON, Jan 13 (Reuters) - E.ON has cut household gas prices on the back of a drop in wholesale energy prices, becoming the first energy supplier in Britain to pass on savings to consumers and putting pressure on other providers to do the same.

The company said it would reduce British household gas prices by 3.5 percent, a cut that it expects will lower customers' gas bills by about 24 pounds ($36) a year.

Wholesale gas prices have fallen on the back of a steep drop in oil prices and British politicians, gearing up for a May national election, have urged energy companies to pass on those savings.

"Given the possibility of a price freeze, we are undoubtedly taking a risk today, but we always put our customers first," said Tony Cocker, chief executive of E.ON UK, part of German utility group E.ON SE.

The leader of Britain's opposition Labour party, Ed Miliband, has promised to freeze energy prices if his party is elected in four months' time.

The cost of living debate is featuring highly on the agenda of this year's election campaigning and a fall in petrol prices as well as inflation hitting a 14-year low have already improved Britons' disposable incomes.

"This will be very welcome news for many billpayers," said Energy Secretary Ed Davey, a member of the Liberal Democrats, junior partner in the coalition government, in response to E.ON's price cut.

Britain's other large energy suppliers, SSE (LSE: SSE.L - news) , Centrica (LSE: CNA.L - news) 's British Gas, EDF Energy, RWE (Xetra: 703712 - news) npower and Scottish Power, all said they were constantly monitoring the market.

"The other major suppliers must now do the right thing for consumers and follow in E.ON's footsteps," said Ann Robinson, director of consumer policy for consumer advisory group uSwitch.

($1 = 0.6605 pounds) (Editing by David Goodman and David Holmes)